Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 20, 2016

FILE NO.: WR 142442

Assessed Person(s): Ray Puhalski and Regina Puhalski

Appellant(s): Ray Puhalski

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 04

Respondent(s): Township of Horton

Property Location(s): 27 Ruttan Road

Municipality(ies): Township of Horton

Roll Number(s): 4746-000-010-22010-0000

Appeal Number(s): 3170364

Taxation Year(s): 2016

Hearing Event No.: 635873

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

Heard: September 15, 2016 in Cobden, Ontario

APPEARANCES:

Parties	Representative
Ray Puhalski	Self-represented
MPAC	Jennifer Gruntz
Township of Horton	No one appeared

DECISION OF THE BOARD DELIVERED BY SCOTT McANSH

INTRODUCTION

1The property before me is a large house on a large rural lot, set atop a hill with a panoramic view of the Ottawa Valley (the “Property”). Ray Puhalski brings this appeal on the basis that the assessment of the Property is too high. He complains that MPAC has not compared the Property to similar property in the area, has not accounted for the state of repair of the Property, and has not adequately considered the difficulty he has had in attempts to sell the Property.

2The Property is a 5.39 acre lot on a rural road approximately a 45 minute drive west of the City of Ottawa. The house on the Property was constructed in 2004 and is 3,276 square feet (“sq. ft.”) with radiant in-floor heating, a walk-out basement, an attached garage and a detached garage. It has no municipal water source, and relies on well water and a septic system.

3For the 2016 taxation year the Property was assessed at $545,000 in the residential property class. For the reasons set out below I reduce the assessment to $515,000.

Legislation

4Section 44.(3)(a) of the Assessment Act (“Act”), RSO 1990, c A.31 requires that I “determine the current value of the land.” Current value is defined in s. 1 as “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.” That is, I must determine what the Property would have sold for in an arm’s length transaction on the relevant valuation day, set pursuant to s. 19.2(1)3 of the Act, as January 1, 2012 for the 2016 taxation year.

5Once I have determined the current value, s. 44.(3)(b) requires that I “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” but only if that adjustment would result in a reduction of the assessment.

Current Value

6MPAC supported its determination of the current value of the Property with the sales of five comparable properties.

79 Ridgeview Drive sold for $585,000 in May of 2010. It has a much smaller lot than the Property and the house is nearly 1,000 sq. ft. smaller than the house on the Property. It is four years newer than the house on the Property. It is located in Braeside, approximately 20 kilometers (“km”) closer to the City of Ottawa. The tradeoff between the location and the house size is likely roughly equal, making this comparable to the Property.

851 Ridgeview Drive sold for $625,000 in June 2011. It has a much smaller lot than the Property and the house is nearly 1,000 sq. ft. smaller than the house on the Property. It was constructed within a year of the house on the Property. It is located in Braeside, approximately 20 km closer to the City of Ottawa. Again, the tradeoff between the location and the house size is likely roughly equal, making this comparable to the Property.

952 Ridgeview Drive sold for $640,000 in April of 2012. It also has a smaller lot than the Property, though the house is slightly larger than the house on the Property. It was constructed in the same year as the house on the Property. It is also located in Braeside, approximately 20 km closer to the City of Ottawa. This property is superior to the Property in location, house size and quality of construction. This indicates that the Property would have sold for less than $640,000 on the valuation day.

10205 Woodridge Court sold for $550,000 in June of 2012. It has a smaller lot and a smaller house than the Property. It is four years older than the house on the Property. It is also located in Braeside, approximately 25 km closer to the City of Ottawa. Again, the tradeoff between the location and the house size is likely roughly equal, making this comparable to the Property.

11Finally, 139 Ottawa Street sold for $735,000 in November of 2011. It has a similar lot size and similar house size to the Property. The house was constructed eight years before the house on the Property. It is located in Arnprior, a full 30 km closer to the City of Ottawa. The superior location for a similar property makes this property superior to the Property. This indicates that the Property would have sold for something less than $735,000.

12All of these properties are located at least 20 km east of the Property, which is closer to the City of Ottawa. Mr. Puhalski argues that there is a great deal of value in being closer to the City of Ottawa, especially as close as where there is a four lane highway, which is Arnprior. I certainly agree that a rural location closer to the services in the City has more value. MPAC’s sales reflect that. The difficulty is what value to attribute to that distance. Without sales or statistical evidence it would be unsafe for me to assign a value.

13MPAC has assessed the Property at $545,000. I note that this is a full $190,000 less than the sale price of 139 Ottawa Street, which is similar but for its far superior location. The slightly inferior houses closer to the City all sold for more than the assessment as well. 9 Ridgeview Drive sold for $40,000 more despite being nearly 1,000 sq. ft. smaller on a much smaller lot. 51 Ridgeview Drive sold for $80,000 more despite having a much smaller house on a much smaller lot. 205 Woodridge Court sold for $5,000 more despite having smaller house on a smaller lot. There is no evidence before me that those adjustments are in error.

14Mr. Puhalski also complained that the Property was inferior to comparable properties because of its wood siding and need for roof repair. I have no evidence that wood siding adds to value more than vinyl, stone or brick. I cannot make an adjustment without evidence.

15Mr. Puhalski provided photographs showing that his shingles ought to be replaced and further indicated that a recent offer to buy the Property included a request for a cost to cure adjustment of $30,000 related to the roof. It is likely that such a cost to cure would have been required on the state and condition date for the 2016 taxation year: December 8, 2015. I accept that as a reasonable market adjustment and reduce MPAC’s opinion of $545,000 by $30,000 to $515,000.

16Mr. Puhalski’s main concern at the hearing, however, was his inability to sell the Property. He indicated that it has been listed since May of 2013. It was initially listed at $725,000, was relisted at $689,000 in April 2014, was reduced to $645,000 in June of 2015, reduced again to $595,000 in July 2015, was reduced to $550,000 in the spring of 2016, and was reduced to its current listing of $500,000 in May of 2016. Through all of these listings there have been very few showings and only one offer, at the lowest listing. That offer was for $480,000, but demanded a cost to cure of $30,000, making the offer $450,000. That never became a sale.

17Mr. Puhalski is of the view that the Property will sell for well under $450,000 when it finally does sell. That may be so, but that sale will likely take place in 2016 or 2017 and is not good evidence of what the Property would have sold for on January 1, 2012. Any sale will likely be highly relevant for the 2017 taxation year, but it is too speculative and too removed in time for me to consider for the January 1, 2012 valuation day. Mr. Puhalski conceded at the hearing that the Property could have sold for $700,000 on January 1, 2012, but only to make the point that there was no way of knowing for sure without selling the Property at that time.

18While he is correct that there is no way to know for certain how the market would have treated the Property on January 1, 2012, that is the determination I must make based on the evidence before me. The best evidence of what the Property would have sold for is what properties like it sold for at that time. As reviewed above, MPAC’s proposed sales near the valuation day support its assessment of $545,000. While sales of properties closer to the Property would have been preferred, I do not have those before me. I have sales evidence that supports MPAC's returned assessment of $545,000, and evidence that supports a cost to cure reduction of $30,000. The result is a current value of $515,000.

19I therefore find that the current value of the Property for the 2016 taxation year is $515,000.

Equity

20Once I have determined the current value of the land I must determine if that value is equitable with the assessments of similar properties in the vicinity.

21MPAC provided a list of 30 properties in the area and provided its Assessment to Sale Ratios. That is, how the assessment compares to the sale price of each property. The median of those ratios is 1.00, which means that, on average, properties in the area are being assessed at their sale prices. No adjustment is required to make the current value of $515,000 equitable with that of similar properties in the vicinity.

CONCLUSION

22I find that the current value of the Property for the 2016 taxation year is $515,000 and that no adjustment is required to make that value equitable with the assessments of similar properties in the vicinity. I therefore reduce the assessment for the 2016 taxation year from $545,000 to $515,000.