James Glenholme Westaway and Nancy Louise Westaway v. Municipal Property Assessment Corporation, 2016 CanLII 5579

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

February 2, 2016

FILE NO.:

WR 135936

Assessed Person(s):

James Glenholme Westaway and Nancy Louise Westaway

Appellant(s):

James Glenholme Westaway and Nancy Louise Westaway

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 28

Respondent(s):

Township of Archipelago

Property Location(s):

1B233 Island

Municipality(ies):

Township of Archipelago

Roll Number(s):

4905-100-004-00700-0000

Appeal Number(s):

2998659, 3029652 and 3093246

Taxation Year(s):

2013, 2014 and 2015

Hearing Event No.

600135

Legislative Authority:

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

Heard:

October 9, 2015 in Parry Sound, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

James Westaway Nancy Westaway

Self-represented

MPAC

David Zhao

Township of Archipelago

No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

INTRODUCTION

11 B233 Island, also known as “Huron Island”, is a single owner island located in the Sans Souci area of Georgian Bay. The island contains a residential component of two acres and a managed forest component of 11.5 acres. It is used seasonally for recreational purposes and is accessible by water only. There are two single family detached residences or cottages located on the island, plus three outbuildings including a boathouse, a small detached garage and a small shed. The larger of the two cottages, built in 1960, is 1,335 square feet (“sq. ft.”) in size. The smaller cottage is 1,006 sq. ft.

2The assessment was returned in the amount of $1,168,000 for the entire parcel in 2013, apportioned as $895,000 for the residential portion and $273,000 for the managed forests portion. In 2014 and 2015, the assessment was returned at $1,143,000, apportioned as $870,000 for the residential portion and $273,000 for the managed forests.

3The Appellants are the owners of the island. They dispute the assessment as being too high, and argue that the assessment ignores the value of a neighbouring island, B232, described as very similar to the subject property by the Appellants.

ISSUES

Preliminary Issue

4Is the assessor in this case qualified to provide evidence respecting the assessment of real property when not possessing accreditation by the International Association of Assessing Officers (“IAAO”)?

Main Issues

5What is the current value of the residential portion of the land for 2013 and 2014 (and deemed for 2015)?

6What is the current value of the managed forests land in 2013 and 2014 (and deemed for 2015)?

7Is the current value of the subject property equitable with the assessed values of similar lands in the vicinity, and, if not, should the assessed value be reduced to make it equitable?

DECISION

8The Assessment Review Board (“Board”) finds that the Appellants’ preliminary objection to the qualifications of the assessor is unfounded and that the assessor, D. MacLean, is competent to give evidence on the assessment of the subject property.

9The Board finds that the current value of the subject property for 2013 is $900,600 (rounded), comprising $5,600 (rounded) for the managed forests and $895,000 for the residential portion of the lands. The Board finds that the current value of the subject property is $875,600 (rounded) for 2014 and 2015, comprising $5,600 in managed forests and $870,000 in respect of the residential portion of the lands.

10The Board finds that there is no evidence before it supporting the conclusion that the value of the subject property requires an adjustment in accordance with s. 44.(3)(b) of the Assessment Act (“Act”) in order to make it equitable with the assessed values of similar properties in the vicinity.

11Accordingly, the assessment of the subject property as at January 1, 2012, for the 2013 taxation year, in the amount of $1,168,000 comprising $273,000 in managed forests and $895,000 in residential lands, is reduced to $900,600 (rounded) comprising $5,600 in managed forests and $895,000 in residential lands.

12The assessment for the 2014 taxation year in the amount of $1,143,000, comprising $273,000 in the managed forests classification and $870,000 in the residential classification is reduced to $875,600 (rounded), comprising $5,600 in the managed forests lands and $870,000 in residential lands.

13The assessment for the 2015 taxation year in the amount of $1,143,000, comprising $273,000 in the managed forests classification and $870,000 in the residential classification is reduced to $875,600 (rounded), comprising $5,600 in the managed forests lands and $870,000 in residential lands.

Evidence and Analysis Regarding Preliminary Issue

14Mr. Westaway challenged the credentials of Darrin MacLean, witness for MPAC, at the outset of the hearing. He provided the Board with a copy of an interim decision of this Board dated January 26, 2012, (WR 112515, by N. Plumstead and R.D. Butterworth) respecting the neighbouring island property, identified municipally as 1 B232 Island (Cowper Island). In this decision, the Board had rejected the testimony of the MPAC witness Mr. Vaudrie, standing in for Mr. MacLean on the day of the hearing. The Board held:

“In the absence of reliable testimony supporting the statements in Exhibit 1, the Board must reject as unproven the statements of MPAC that its valuation methodology produces values which fall within acceptable standards.”

15In that case, the Appellants established at the outset of this hearing that Mr. MacLean and Mr. Vaudrie lacked accreditation with IAAO. The Board found: “The MPAC witness is not qualified to testify on IAAO standards and methodology. In the circumstances, the Board rejects MPAC’s reliance upon such standards and methodology.”

16In the present appeal, Mr. MacLean testified that he had worked for the assessment corporation for almost 28 years. During those years he has attended educational programs designed to augment his skills in mass appraisal. While not obtaining accreditation from the IAAO, Mr. MacLean testified that he is both trained in and experienced in the use of statistics in mass appraisal. Mr. MacLean prepared the evidence he would submit on behalf of MPAC and he added that he had inspected the property himself. The evidence he would give would be based on his expertise as an experienced assessor, combined with his personal knowledge of the subject property. Given that Mr. MacLean would be relying on his own inspection and his knowledge of mass appraisal, the Board finds he is competent to give evidence on behalf of MPAC.

Issue

The Residential Portion

17Section 44.(3)(a) of the Act requires the Board to first “determine the current value of the land.” The definition of “current value” is contained in s. 1 of the Act:

“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.”

18Section 19.(1) of the Act states that, “…the assessment of land shall be based on its current value…”.

19The best measure of current value is an arm’s length and market-tested sale of the subject property on or close to the valuation day of January 1, 2012. If no such transaction took place, a further measure of current value is derived from 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.

20To enable an estimate of value for the subject property to be derived from an analysis of comparable property sales, there must be sufficient elements of similarity in terms of physical factors. In seasonal/recreational properties on water, factors for comparison will include not only the structure and quality of primary and secondary buildings, but also topography, the presence of permanent docking, the amount of frontage, direction of exposure, and the quality of the waterfront. Because seasonal/recreational properties are never identical, particular attention must be paid to the comprehensive description of each comparable property.

21Mr. MacLean filed Exhibits 1 and 2 for MPAC. The first contains the evidence used for the market analysis of the residential portion of the subject property, and the second contains the assessment information and calculations used by Mr. MacLean in determining the value of the managed forests. Exhibit 1 contained 16 photographs of the island and the structures located there.

22The Appellants filed Exhibit 3. Pages 24 through 39 were duplicates of pages 7 through 22. Pages 60 and 61 were removed with the Appellants’ consent as not being relevant to the current proceeding.

23The value of the residential portion of the subject property as returned is $895,000 for 2013 and $870,000 for 2014 and 2015. MPAC’s evidence included eight comparable sales occurring within one to seven kilometers of the subject property. Some of these properties are located on subdivided islands; some are single-owner islands. In this case, the valuation day is January 1, 2012, which means that sales occurring close in time to this date will give the best evidence of the state of the market at the relevant time. The Board rejects some of MPAC’s comparable sales that took place well outside a reasonable period for comparison, including Sale A (sold in September, 2008) and Sale G (sold in January, 2009). The Board also rejects Sale H, a much smaller property with a small cottage that is not readily comparable to the subject property and the other comparable sales.

24The remaining five comparable sales provide a reasonable range of values which help establish a current value for the subject property.

25The Appellants provided no comparable sales evidence. Details of the five sales used to determine the current value of the residential portion of the subject property are contained in the following Table:

Table 1: Comparable Residential Sales

Subject

Sale B (IS B220)

Sale C (IS B223)

Sale D (IS 1 B388)

Sale E (IS 1 B433)

Sale F (IS 1 B642)

Sale Date

2013/08

2011/03

2012/09

2012/12

2011/12

Sale Price

$1,130,000

$2,580,000

$4,475,000

$1,750,000

$2,300,000

Site Area (acres)

13.50 (2 ac. Res.)

1.60

8.81

12.00

26.00

4.50

Residence Year Built

1960

1947

1905

1959

1959

1988

Res. Area (sq. ft.)

1,336

1,112

2,072

3,069

400

2,806

Secondary Res. Structures

1 (1,006 sq. ft.)

1 (485 sq. ft.)

2 (633 sq. ft. total)

5 (4,441 sq. ft. total)

0

1 (360 sq. ft.)

Other Structures

3

1

1

0

0

1

Hydro

Yes

Yes

Yes

Yes

No

Yes

26These five comparable property sales provide examples of superior, inferior and relatively comparable properties in a situation where no two properties are identical.

27Sale B is an example of a much smaller island property with two single family dwellings, similar to the subject property but a much smaller island with older buildings and fewer secondary structures than the subject property. The sale price in August, 2013 of $1,130,000 is reasonably comparable with the subject without the managed forests component.

28Sale C is an example of a more valuable property by virtue of its having three single family dwellings on site along with another secondary structure. The site area is almost nine acres in contrast to the two acres of residential land in respect of the subject property. It would be reasonably comparable with the subject property with an adjustment for the additional land.

29Sale D is an acre and a half smaller in site area, but contains six single family detached dwellings, the largest of which is 3,069 sq. ft. and the second largest of which is 1,792 sq. ft. MPAC describes these cottages as very good quality structures. This property is significantly more valuable than the subject property due to the number, size and quality of buildings. The value in this property lies in the structures and not in the land. The subject property, in contrast, is a slightly larger island with fewer and smaller buildings. It would be of less value.

30Sale E is an island approximately twice the size of the subject property. The single family detached dwelling, one year older than the subject property’s main dwelling, is only 400 sq. ft. and lacks hydro. The sale price of this comparable property, at $1,750,000 in 2012, reflects the much larger site area than the subject property. However, it lacks the structures and amenities of the subject. Its’ lack of managed forests and its larger site area account for a value greater than the subject property.

31Sale F is a smaller island than the subject property with a newer main dwelling described by MPAC as being “very high quality” and 1,470 sq. ft. larger than the larger of the cottages located on the subject property. Sold very close to the valuation day for $2,300,000, the caliber of construction of the residence supports a higher value for this property than the subject property.

32The Appellants argued that the most comparable island property is Island B232, which, at periods of low water, is technically joined to the subject property. However, this island has not been sold near the valuation day or in the recent past, and evidence provided by the Appellants regarding this property included assessment information relating to the previous assessment cycle with a valuation day of January 1, 2008. This is not relevant to the current assessment cycle and provides no assistance on the issue of current value of that property: the amount that a willing buyer would pay to a willing seller to purchase the property in an arm’s length transaction occurring at or near January 1, 2012.

33The evidence provided by MPAC is adequate to support the current value of the residential portion of the property. Evidence presented by the Appellant did not include comparable sales evidence and was not sufficient to challenge MPAC’s assessment of the residential portion of the property. The Board confirms the assessments of the residential portion of the subject property for 2013 and for 2014 (and deemed for 2015).

The Managed Forests Portion

34The parties agreed that the managed forests portion of the subject property comprises 11.5 acres. Managed forests lands are to be assessed based on their current use only as set out in s. 19.(5.2) and s.19.(5.2.1):

35Section 19.(5.2) provides:

Conservation land, managed forests. – The current value of land that is conservation land as defined in the regulations or land in the managed forests property class shall be based only on the current use of the land and not other uses to which the land could be put.

36Section 19.(5.2.1) provides:

Current value of managed forests. – Despite subsection (5.2) and any other provision of this Act, the Minister may, by regulation, provide that the current value of the land in the managed forests property class shall be determined in accordance with the regulations.

37Ontario Regulation 282/98, s. 32.2(1) as amended (“Regulation”), sets out the rules respecting the assessment of current value where the parcel contains both managed forests and another property class. It provides:

32.1 (1) The current value of land in the managed forests property class shall be determined as follows for the 2013 and subsequent taxation years:

1. Determine the value of the land in accordance with subsection 19 (5.2) of the Act.

2. Determine the value of the land in accordance with subsection (2).

3. If the value determined under paragraph 1 is less than the value determined under paragraph 2, the current value of the land is the value determined under paragraph 1.

4. If the value determined under paragraph 2 is less than 31 per cent of the value determined under paragraph 1, the current value of the land is the amount calculated by multiplying the value determined under paragraph 1 by 0.31.

5. In any other case, the current value of the land is the value determined under paragraph 2. O. Reg. 656/05, s. 1; O. Reg. 394/08, s. 2; O. Reg. 339/12, s. 1.

(2) For the purposes of paragraph 2 of subsection (1), the value of the land is determined as follows:

1. Determine whether the geographic area in which the land is located is listed in Column 2 of Table 1 to Part IX.1 of this Regulation. If it is, take the step described in paragraph 2. If it is not, take the steps described in paragraphs 4 and 5.

2. If the geographic area is listed in Column 2 of Table 1, determine whether the land band for the land, as assigned by the assessment corporation, is listed in Column 3 of Table 1 for the applicable geographic area. If it is, take the steps described in paragraphs 3 and 5. If it is not, take the steps described in paragraphs 4 and 5.

3. For land located in a geographic area listed in Column 2 of Table 1 and assigned to a land band listed in Column 3 of Table 1, identify the applicable value per acre of the land as set out in Column 4 of Table 1.

4. For any other land, identify the applicable value per acre of the land as set out in Column 2 of Table 2 to Part IX.1 of this Regulation using the land band assigned to the land by the assessment corporation.

5. The value of the land is calculated by multiplying the applicable value per acre of the land by the acreage. O. Reg. 656/05, s. 1; O. Reg. 101/09, s. 1.

(3) In this section,

“land band” means a geographic area in which similar farm properties sell for similar prices, as determined by the assessment corporation under subsection 19 (5) of the Act. O. Reg. 656/05, s. 1.

38Evidence for MPAC respecting the calculation of the assessment of the managed forests portion of the land was set out MPAC’s Exhibit 2. Briefly, MPAC interprets O. Reg. 32.1 as setting the current value of the land as the greater of the value per acre calculated using the land band value in Table 1 to the Regulation, or the amount which is 31% of the current value of the managed forests portion of the land. For 2013, Mr. MacLean calculated that the current value of the entire property was $1,776,000. Subtracting the value of the buildings on the property, Mr. MacLean calculated that the land value was $1,035,000 or $76,681 per acre. In order to arrive at the residential portion, the amount of $741,743 (the building component) was added to the land value of two acres for a total of $895,106. The managed forests portion was calculated by multiplying 13.5 acres by $76,681, for a value of $881,836.

39Mr. MacLean then applied the provisions of O. Reg. 282/98 s. 32.1 and determined that the land band value set out Table 1 to the Regulation was $486 per acre or $5,589 for the 11. 5 acres. As this value is less than 31% of the land value (an amount of $273,369), Mr. MacLean determined that he should subtract 31% of the current value of the land from the current value, arriving at a figure of $608,467. This amount was then subtracted from the overall assessed value of the entire property to arrive at an overall value of $1,167,533 or $1,168,000 (rounded).

40A separate section of the Regulation addresses properties containing a portion of land in both managed forests property class as well as and in another property class.

41Section 32.2 provides as follows:

32.2 (1) This section applies if a parcel of land contains both land in the managed forests property class and land in another property class. O. Reg. 656/05, s. 1.

(2) The current value of the land shall be determined as follows for the 2013 and subsequent taxation years:

1. Determine the current value of the land in the managed forests property class under subsection 19 (5.2) of the Act.

2. Determine the current value of the land in the managed forests property class under section 32.1 of this Regulation.

3. Subtract the amount determined under paragraph 2 from the amount determined under paragraph 1. If the amount determined under paragraph 2 is greater than the amount determined under paragraph 1, the amount calculated under this paragraph is deemed to be zero.

4. Subtract the amount calculated under paragraph 3 from the current value of the entire parcel of land.

5. The amount calculated under paragraph 4 is the current value of the land. O. Reg. 656/05, s. 1; O. Reg. 394/08, s. 3; O. Reg. 339/12, s. 2.

42Mr. MacLean calculated that, if he applied s. 32.2 of the Regulation rather than s. 32.1, the result would be a higher value. He declined to use that calculation. In addition, Mr. MacLean had determined that MPAC was recommending a reduction of the overall assessment to $1,143,000, and would therefore adjust the apportionment as follows:

Residential portion: $870,000

Managed forests: $273,000

43The Appellants submitted that the managed forests calculation applied by MPAC did not accord with the information contained on their website, and that, in their opinion, the calculation was incorrect. The Board agrees.

44The first requirement is to determine the current value of the property. Under s. 19.(5.2) of the Act, while the managed forests portion of the land should be assessed at its current value, that current value is based only on the use to which the land is currently put and not on other uses to which the land could be put. In this case, the evidence confirmed that the only use to which the 11.05 acre parcel is being put is as managed forests land. Therefore, the current value is the value prescribed by s. 32.1 of O. Reg. 282/98. The value is based on the prescribed “land band”, contained in Table 1 of O. Reg. 292/98. The prescribed value is to be used in all cases other than where the value of the property as determined under s. 19(5.2) is less than the “prescribed value” or where 31% of the value as determined under s. 19(5.2) is greater than the prescribed value. Section 32.2(2) of the Regulation applies specifically to the case where a parcel of land contains land in both the Managed Forests Property Class and another property class. It is clear from s. 32.2(2) that the same advantageous provisions apply to the determination of current value of the managed forests portion of those lands as would apply to other managed forests land.

45The Board does not accept the determination by MPAC that the current value of the managed forests portion of the property is $76,681 per acre or the same value as given for the land in the residential class. The Board finds that the determination of value of the managed forest portion of the land is clearly specified by s. 19.(5.2). Using the Regulation, the Board calculates the value as per sub-paragraphs 1 through 5 of s. 32.2 (2) of the Regulation. Using Table 1 of the Regulation, which sets out the value of land band 2804 as $486 per acre, s. 32.(2)5 provides that “the value of the land is calculated by multiplying the applicable value per acre of land by the acreage”. Multiplying this value by 11.05 acres results in a value of $5,589. This is the “value determined under paragraph 2”.

46Section 32.2 (2)5 provides as follows: “The amount calculated under paragraph 4 is the current value of the land.” Because the value is not less than 31 % of the value determined under paragraph 1, the value need not be multiplied by 0.31 as set out in paragraph 4, s. 32.1(1).

47The value of the managed forests portion of the land, when added to the residential portion of the land for 2013 in the amount of $895,000 results in a total current value of $900,370 or $900,000 (rounded). For 2014 and 2015, the managed forests value ($5,370) added to the residential portion ($870,000) results in a total of $875,370 or $875,000 (rounded).

Equity

48Section 44.(3)(b) of the Act mandates that the Board shall:

(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.

49The objective of the Act is to ensure that every parcel of land be assessed at the correct current value. The Regulations work with the provisions of the Act and assist in the interpretation and application of those provisions. In the case of managed forests properties, O. Reg. 282/98 contains specific rules that both determine eligibility for inclusion in this property class the method of assessment. Part V.1 “Assessment of the Managed Forests Property Class and Related Land” sets out the provisions for the determination of current value for managed forests and also for situations where the parcel contains both managed forests and another property class.

50Where the current value is determined using Table 1, the vicinity would include any properties in the land band in which the subject property is located. Because the current value per acre is set out by Regulation, no adjustment on the ground of equity would be required.

CONCLUSION

51The Board finds that the current value of the subject property is $900,600 (rounded), comprising $5,600 for the managed forests and $895,000 for the residential portion of the lands for 2013. The Board finds that the current value of the subject property is $875,600 (rounded) for 2014 and 2015, comprising $5,600 in managed forests and $870,000 in respect of the residential portion of the lands.

52The Board finds that there is no evidence before it supporting the conclusion that the value of the subject property requires an adjustment in accordance with s. 44.(3)(b) of the Act in order to make it equitable with the assessed values of similar properties in the vicinity.

53Accordingly, the assessment of the subject property as at January 1, 2012, for the 2013 taxation year, in the amount of $1,168,000 comprising $273,000 in managed forests and $895,000 in residential lands, is reduced to $900,600 (rounded) comprising $5,600 in managed forests and $895,000 in residential lands.

54The assessment for the 2014 taxation year in the amount of $1,143,000, comprising $273,000 in the managed forests classification and $870,000 in the residential classification is reduced to $875,600 (rounded), comprising $5,600 in the managed forests lands and $870,000 in residential lands.

55The assessment for the 2015 taxation year in the amount of $1,143,000, comprising $273,000 in the managed forests classification and $870,000 in the residential classification is reduced to $875,600 (rounded), comprising $5,600 in the managed forests lands and $870,000 in residential lands.