Trousdale v. Municipal Property Assessment Corporation, 2016 CanLII 63436

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

September 14, 2016

FILE NO.:

WR 141792

Assessed Person(s):

Anne Cameron Trousdale

Appellant(s):

Anne Cameron Trousdale

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”)

Region 05

Respondent(s):

Township of Central Frontenac

Property Location(s):

Opeongo Point Lane

Municipality(ies):

Township of Central Frontenac Township

Roll Number(s):

1039-050-020-30805-0000

Appeal Number(s):

3135709 and 3145556

Taxation Year(s):

2015 and 2016

Hearing Event No:

635066

Legislative Authority:

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

Heard:

August 05, 2016 in Sharbot Lake, Ontario

APPEARANCES:

Parties

Representative

Anne Cameron Trousdale

Peter Trousdale

MPAC

Brian Leggett

Township of Central Frontenac

No one appeared

DECISION OF THE BOARD DELIVERED BY JACQUES LAFLAMME

INTRODUCTION

1The subject property is a vacant residential/recreational waterfront lot located in the Township of Central Frontenac at Opeongo Point on Eagle Lake. This lot has an effective frontage of 98 feet and an effective depth of 160.98 feet with a site area of 15,776.44 square feet. The lot was described as having a shallow weedy shoreline and a steep slope. The Municipal Property Assessment Corporation (“MPAC”) valued this property using the direct sales comparison approach.

2The January 1, 2012 total current value assessment (“CVA”) as calculated by MPAC for the subject property is $61,000.

ISSUE

3The Board must determine the proper current value for the land for the 2015 and 2016 taxation years.

4Once that is done, the Board must decide if an adjustment is needed to the CVA to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment.

DECISION

5The Board reduces the CVA of the subject property lot from $61,000 to $31,000 for the 2015 and 2016 taxation years.

REASONS FOR DECISION

Position of MPAC

6Brian Leggett, a Property Valuation Analyst with MPAC, stated that he had a recommendation to lower the land value from $61,000 to $33,500 because upon inspection of the waterfront lot on July 8, 2016, he observed that the property sloped down from the road and had a weedy/swampy/shallow shoreline. This in Mr. Leggett’s opinion warranted a 45% downward adjustment to the land value. The owner did not accept the recommendation.

7Mr. Leggett informed the Board that the subject property along with two adjoining properties had been purchased as one package. The new purchaser was the adjoining property owner. He stated that in his opinion the sale price could not be relied on because it was not an “arm’s length” transaction. He stated that the property was offered for sale to the adjoining property owner only and never listed through real estate or offered for sale to the general public. For this reason Mr. Leggett said that the sale could not be relied on.

8Mr. Leggett submitted one exhibit.

9Exhibit 1 is MPAC’s valuation report. This report contains a property description, maps, pictures of the subject property, an analysis of the three sales that Mr. Leggett deems to be comparable, a table showing time adjustment factors, an equity analysis using 40 properties and a listing of three sold properties.

Position of Appellant

10Mr. Trousdale, a solicitor, represented the owner who is his wife.

11Mr. Trousdale submitted two exhibits.

12Exhibit 2 is the executed “agreement of purchase and sale” in the amount of $275,000 dated January 23, 2014. This sale amount is for three severed adjoining properties, two of which are vacant recreational waterfront lots and the third being a built on waterfront cottage.

13Mr. Trousdale’s only argument is that this sale represents current value and should be the determining factor in this appeal.

14Exhibit 3 is the “History of Negotiation”.

15Schedule “A” that forms part of the “Agreement of Purchase and Sale” allocates the total purchase price of $275,000 for the three properties as follows: the two vacant waterfront lots, $10,000 for the subject property, $15,000 for the second vacant lot and the main cottage at $250,000. It is Mr. Trousdale’s opinion that these allocated values are the current values that ought to be used by this Board.

The Legislation

16The following provisions of the Assessment Act (“Act”) instruct the Board in appeals of this nature.

17Section 1 of the Act defines “current value” and “land” as follows:

“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.

“land”, “real property” and “real estate” include,

(a) land covered with water,

(b) all trees and underwood growing upon land,

(c) all mines, minerals, gas, oil, salt quarries and fossils in and under land,

(d) all buildings, or any part of any building, and all structures, machinery and fixtures erected or placed upon, in, over, under or affixed to land,

(e) all structures and fixtures erected or placed upon, in, over, under or affixed to a highway, lane or other public communication or water, but not the rolling stock of a transportation system;

18Section 19.(1) of the Act states:

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

19Section 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.

20Section 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.

21Section 44.(3)(a) and (b) 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.

The Board’s Analysis

22Under the Act the Board is required to do three things:

1. Find the current value of the property.

2. Make reference to the value of which similar lands in the vicinity are assessed.

3. Adjust the assessment of the subject property if the adjustment will result in a reduction in the assessment.

Current Value

23Mr. Leggett stated that this sale was not arm’s length. The Board does not agree. This sale was not negotiated between family members.

24The Board does however agree with Mr. Leggett that this sale is not your typical sale. The properties sold, were never offered up for sale to the public through real estate for reasons that have not been made clear. The allocated values assigned by the vendor for the three properties sold were based on a formula unknown to the Board or any of the parties at the hearing. In the Board’s opinion these allocations were done for some accounting reason. The Board cannot rely on these apportionments of value to establish current values. It is interesting to note that if the Board accepted the values indicated in the “offer to purchase and sale” the larger lot gets the lower value. In other words not only is the sale not typical, the values assigned by the vendor are not helpful. The Board assigns little weight to the sale.

25MPAC submitted three sales with their accompanying CVAs. Of the three sales, only one is deemed to be truly comparable to the subject. Sale A is a property on Bull Lake and sale C is on Sharbot Lake. Only Sale B is on Eagle Lake, only a few doors away from the subject property and is a lot with approximately the same water frontage and overall size. For these four reasons, it is the Board’s opinion that sale C is the best and only comparable that the Board can rely on. The use of this property as a comparable has not been disputed by Mr. Trousdale. The time adjustment factor used by MPAC to adjust sales to the base year has not been challenged by Mr. Trousdale.

26Although the Board is not totally comfortable with using only one sale, it is the only evidence that the Board can use to calculate current value.

27The Board accepts Sale B as the best comparable but must adjust the value to reflect the negative aspects of the subject property. Mr. Leggett used a minus 45% to adjust and reduce the value of the subject for the steep slope and a weedy and shallow shoreline. The water frontage dimensions on both properties are very comparable and so no adjustment for lot size is needed.

28The Board will use the time adjusted selling price of Sale B and reduce it by 45% to bring it to a common base ($97,735 less 45% = $53,754).

29The Board finds that the current value of the subject property is $53,000 rounded down.

Equity

30MPAC presented to the Board an equity analysis in Exhibit 1, using 40 sold properties covering a fairly large area which comprised of several lakes. When the assessor compared the CVAs to the time adjusted sales of the 40 sold properties, the median assessment to sales ratio (“ASR”) was 0.97. This means that MPAC is slightly under assessing the properties.

31However, the one and only comparable that the Board is using to calculate current value is assessed at only 59% of its adjusted selling price. If fairness is to be achieved the Board cannot ignore the fact that this neighboring property, that the Board is using to calculate the current value assessment of the subject property, is assessed so much lower than its selling price. Section 44.(3)(b) gives clear direction to the Board “have reference to the value at which similar lands in the vicinity are assessed and adjust…..”. Using only one property, sale “B” to determine equity is not ideal and should be avoided. However, in this case, it is the best evidence after considering its similarity and close proximity to the subject property when compared to the large vicinity and unknown similarity of the properties in MPAC’s analysis. The Board will adjust the subject property as well to the same assessment to sale ratio level of 59%.

32The Appellant did not submit anything for equity analysis.

33Consequently, the Board adjusts the current value for equity ($53,000 x 0.59) = $31,000 rounded down.

CONCLUSION

34The total current value assessment is lowered to $31,000 for the taxation years 2015 and 2016.