Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 20, 2016

FILE NO.: WR 141892

Assessed Person(s): Anna Bullock and Peter Bullock

Appellant(s): Anna Bullock and Peter Bullock

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 28

Respondent(s): City of North Bay

Property Location(s): 1925 Northshore Road

Municipality(ies): City of North Bay

Roll Number(s): 4844-050-068-74062-0000

Appeal Number(s): 3165564

Taxation Year(s): 2016

Hearing Event No. 635057

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

Heard: August 03, 2016 in North Bay, Ontario

APPEARANCES:

Parties	Representative
Peter Bullock	Self-represented
Anna Bullock	No one appeared
MPAC	Blair Adams
City of North Bay	Lisa Beaulieu

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

INTRODUCTION

1The subject property is a single family detached on water, located at 1925 Northshore Road, in the City of North Bay. It is located in Four Mile Bay on Trout Lake. It has an effective site area of 29,185.20 square feet (“sq. ft.”) or 0.67 acre. It is 75-100% treed. There is a steep slope from the road to the lake for which the subject property receives a negative 3% variable. It also receives a positive 10% variable for its sandy shoreline. It is improved with a 1,508 sq. ft. single storey dwelling built in 1997. It has a 1,024 sq. ft. finished basement that includes a basement walkout. It has a ground-source geothermal source for heating/cooling. A well is the source of water. The Bullocks purchased the property in May 2015.

2The original assessment was returned at $589,000 for the 2016 taxation year.

3Blair Adams, representing the Municipal Property Assessment Corporation (“MPAC”), assessed the current value of the property using the direct sales comparison approach and provided information on five sales of properties in proximity to the subject property on Four Mile Bay and all located in North Bay (Exhibit 1). He recommended an adjusted value of $589,000. The sales information provided to the Assessment Review Board (the “Board”) included key features of these properties, in order to compare them with the subject property. The actual sale price of each property was listed, along with a time-adjusted price (except for two sales that occurred in 2013) for the sales showing the likely value of those properties on the valuation date of January 1, 2012. The sales comparables share similarities with the subject property but also some differences. Mr. Adams considers Sales B and D as relatively comparable and Sales A, C and E as inferior to the subject property. He considers Sale B located at 2105 Northshore Road as the most comparable property. It is a few properties away and has a similar building size and amenities. It is six years newer. He estimates the market value of the subject property to be $589,000. Taking the 2015 sale price of $565,000 into account, the Assessment to Sale Ratio (“ASR”) of 1.03 is well within the International Association of Assessing Officers (“IAAO”) standards of 0.90 and 1.10. He is of the opinion that the current value assessment (“CVA”) of $589,000 is reasonable.

4Mr. Adams submitted an Equity Analysis included as part of Exhibit 1 that considered 30 arm’s length sales of residential properties within 3.59 kilometers of the subject property that took place between January 2009 and December 2012. He acknowledged that some of these properties are on the main lake. They produced a median ASR of 1.04. He concluded that no equity adjustment is needed.

5Mr. Bullock is of the opinion that his property is assessed too high and should be more reasonably assessed at $557,000, adding that he would have settled for the sale price of $565,000. He added that the recommended adjusted value of $589,000 was based on an inspection in January 2016 as part of the Request for Reconsideration (“RfR”) process that rated the slope as steep and added a third bathroom.

6Mr. Bullock noted several concerns:

• Prevailing westerly winds have resulted in organic debris deposits creating a layer of mucky ooze which is encountered at about knee depth and carried out into deeper water. The organic layer also has associated weed growth. In shallow water pickerel weed is dominant while in deeper water water-lily prevails. He attached photos of these conditions (Exhibit 2). He added that they do not walk into the lake from the shore; rather they dive in off the floating dock. He is of the opinion that the shoreline should be rated as weedy.

• The heating source should be coded “as other” as he has a ground-sourced geothermal heating/cooling system and referenced Ontario Regulation 282/98. It cost $27,000 to install.

• The length, steepness and total area of the driveway are not properly reflected in the valuation. The driveway is especially challenging in the winter. In his opinion, it has a negative effect on the desirability and value of the property.

• The location of the subject property and the distances to be travelled for services including the hospital. He also referenced access to high speed internet that is available only through cell phone or satellite connections with strict data limits and hydro “power bumps” which also influence desirability and market value.

• The real estate market for larger/more expensive homes is flat and has been for some time. Baby boomers are downsizing and moving into urban centers to be closer to services. The completion of the four lanes on Highway 11 has not had a significant impact on waterfront real estate.

7This appeal raises two issues: does the recommended assessment of $589,000 reflect the current value of the land; and should the assessment be adjusted to make it equitable with the assessments of similar lands in the vicinity.

DECISION

8For the reasons stated below and as directed by s. 44.(3)(a) of the Assessment Act (“Act”), the Board finds the current value of the subject property, as of the valuation day of January 1, 2012, to be $565,000 and finds that it does not require a further adjustment under s. 44.(3)(b) of the Act in order to make it equitable with similar lands in the vicinity.

9Accordingly, for the 2016 taxation year, the assessment of the subject property is reduced from $589,000 to $565,000.

REASONS FOR DECISION

The Legislation

10The initial task for the Board is to determine the current value of the subject property as required by s. 44.(3)(a) of the Act.

11Section 19.(1) of the Act states: that the assessment of the land shall be based on its current value. Current value is defined in s. 1 to mean, 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 19.2(1) of the Act provides that for the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

13In determining the value at which the land shall be assessed, s. 44.(3) of the Act requires that the Board (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.

14Section 40.(17) of the Act provides that, where value is the ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

15After hearing the evidence and the submissions of the parties, the Board shall determine the matter pursuant to s. 40.(19) of the Act.

The Board’s Analysis

Current Value

16The initial task of the Board is to use the best evidence available to determine the current value of the property as required by s. 1 and s. 19.(1) and s. 44.(3)(a) of the Act.

17The best evidence the Board can receive of current value is an arm’s length and market tested sale of the subject property on the valuation day or close to it. There is a sale. However, the sale for $565,000 occurred in May 2015 which is well beyond the January 1, 2012 valuation date. The next best measure of current value is arm’s length and market tested sales of comparable properties located nearby, as close as possible to the valuation date of January 1, 2012. This measure acts as benchmark and a gauge of the accuracy for the assessed value of the subject property and comparable properties.

18To enable an estimate of value for the subject property to be derived from suggested comparable properties there must be sufficient elements of similarity, in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc., so as to enable a direct comparison to be made between a suggested comparable property and the subject property.

19The Board has five sales to consider.

20Sale A – 400 C Shorewood Road - is a 2,004 sq. ft. two-storey dwelling built in 2005. The basement is unfinished although there is a walkout basement. There is no garage. It is located on an extremely steep lot identified as a cliff and receives a negative 3% adjustment. The lot size is slightly smaller than the subject property and has three-quarters of the frontage. It also receives a positive 10% variable for its sandy shoreline. Unlike the subject property, the source of water is from the lake. It has a northern exposure. It is located on a Cottagers’ Association privately maintained road. There is a time adjusted sale of $478,266. While this property shares some similarities with the subject property, it has less frontage, its topography is described as a cliff, the water source is the lake, there is no finished basement, no garage and it is in a different area of Four Mile Bay. The Board finds this property to be inferior to the subject property.

21Sale B – 2105 Northshore Road - has a lot size that at 1.08 acres is almost twice the size of the subject property. The frontage at 203 ft. is similar to that of the subject property but the lot is deeper. The topography is better and is identified as having a slight slope. It is less treed at 26-50% than the subject property. It receives a negative adjustment for its weedy/algae shoreline. It has a western exposure. The one-storey dwelling is newer than the subject property having been built in 2003 and slightly larger at 1,861 sq. ft. It has 559 sq. ft. of finished basement. Like the subject property, it has a private well as its source of water. There is a sale of $531,000 which is not time adjusted as it occurred in June 2013. The Board finds this property to be relatively comparable.

22Sale C – 955G Northshore Road - has a lot size of 1.04 acres that is almost a third larger than the subject property. However, the frontage at 81 ft. is less than half the frontage of the subject property. The topography is identified as level. It also receives a positive 10% variable for its sandy shoreline. The two-storey dwelling is older having been built in 1989 and is about the same size at 1,554 sq. ft. It has a less desirable heat source (electric baseboards). There is an attached two-car garage. It has a southern exposure. It sold in May 2013 for $420,000 which is not time adjusted. While this property shares some similarities with the subject property, it has much less frontage, the dwelling is older and has electric baseboards as a source of heat. The Board finds this property to be inferior to the subject property.

23Sales D and E – 39 Garland Road –has a slightly larger lot at 0.76 acres. However, the frontage at 110 ft. is about one half of that of the subject property. The topography is better and is identified as level. The shoreline is identified as gravelly as opposed to the sandy frontage of the subject property. The two-storey dwelling is larger at 2,110 sq. ft. There is no finished basement. There is a slightly larger attached garage. There is no well. Water is drawn from the lake. The first time adjusted sale of $434,500 occurred in April 2010. There was an interior renovation of the kitchen and bathroom in 2011 prior to the second sale in July 2012 with a time adjusted sale of $552,886 and an effective year built of 1994. The Board considers the property as inferior to the subject property prior to the renovation but somewhat comparable taking into account the larger and renovated dwelling that offsets the reduced frontage.

24In considering Sales B and E, the Board considers Sale B at 2105 Northshore Road to be the most comparable to the subject property. It is also the closest to the subject property. The frontages are virtually identical. Sale B’s dwelling is a slightly newer and a bit larger and the topography is better in that it is identified as having a slight slope. A big difference appears to be the variable attached to the shoreline. Sale B receives a negative adjustment for its weedy/algae shoreline whereas the subject property receives a positive 10% adjustment on account of its sandy shoreline.

25Regarding the adjustment for the sandy shoreline, Mr. Bullock maintains that it should instead be assessed as weedy. He explained that the organic layer on the bottom has associated weed growth. In shallow water, pickerel weed is dominant while in deeper water, water-lily prevails. Mr. Bullock provided photos (Exhibit 2) which he states were taken in early July 2016 including some that show weeds popping up close to the boat docked at the end of the floating dock. Mr. Adams stated that a property will receive the predominant variable, “sandy” or “weedy”, but not both. Mr. Adams submitted a sample photograph of a property that receives a variable for “weedy” (Exhibit 6) with thick weed growth close up to the shoreline. He would not have applied the weedy variable to the subject property. The Board notes, however, that from the photo of Sale B, at 2105 Northshore Road included in Mr. Bullock’s evidence (Exhibit 3), it does not appear to have a thick weedy shoreline and yet it receives a negative variable for “weedy/algae”.

26Regarding the steep slope, Mr. Bullock noted the grade is between the house and Northshore Road. Also, the original owner designed an S shaped driveway to lower grades which are especially challenging in the winter. There is evidence of an inspection carried out by MPAC in January 2016 and the Board is satisfied that MPAC has taken the topography into account in assigning a negative 3% variable to the subject property.

27Regarding the ground -sourced geothermal heating/ cooling system, Mr. Bullock is of the opinion that it should be coded “as other” and referenced Ontario Regulation 282/98. Mr. Adams is of the opinion that a ground-sourced geothermal heating/cooling system does not add value. Rather, geothermal is a heat source and one must consider how the heat is distributed. Mr. Bullock confirmed that air is distributed through a duct system. Mr. Adams stated that MPAC assesses it as a forced air system with air conditioning for a value of $3,000. The Board has considered the relevant section of Ontario Regulation 282/98 and finds that the subject property with its duct system is assessed “as if it contained a non-renewable energy system that is typically found in similar lands in the vicinity”.

28Putting this all together, the Board finds that the current value should not be greater than the sale price of $565,000 even though it occurred in May 2015 and which, in the opinion of the Board, remains the best evidence of current value. It is still greater than the sale of the best and closest comparable located at 2105 Northshore Road that occurred in June 2013. As noted above and based on the evidence before the Board, it is not, clear why 2105 Northshore Road would receive a negative variable for its weedy/algea shoreline whereas the subject property does not.

29Mr. Bullock also raised several concerns including the distance of the subject property to various services, its non-appeal to a certain demographic, limited access to high speed internet and hydro “power bumps” that impact on its marketability. Mr. Bullock struck the Board as an informed and sophisticated purchaser. As he indicated to the Board in his presentation, he and his spouse own other properties in North Bay including another property on Northshore Road and he has experience with other assessments and appeals. He and his spouse had been in the market for a new home on Trout Lake for many years and are familiar with the market. Presumably, these concerns also factored into their decision to purchase the subject property and reflected market conditions.

Equity with Similar Lands in the Vicinity

30The Board must also consider the assessments of similar properties in the vicinity and determine whether the correct current value as established is inequitable relative to those assessments. If so, it should be adjusted to make it equitable, as required by s. 44.(3) of the Act.

31Mr. Adams submitted an Equity Analysis included as part of Exhibit 1 that considered 30 arm’s length sales of residential properties within 3.59 kilometers of the subject property that took place between January 2009 and December 2012. They produced a median ASR of 1.04 that falls within an acceptable range. He concluded that no equity adjustment is required.

32The Board finds that the evidence does not support the conclusion that the current value of the property as determined above requires an equity reduction in accordance with s. 44.(3)(b) of the Act.

CONCLUSION

33For the foregoing reasons and as directed by s. 44.(3)(a) of the Act, the Board finds the current value of the subject property, as of the valuation day of January 1, 2012, to be $565,000 and finds that it does not require a further adjustment under s. 44.(3)(b) of the Act in order to make it equitable with similar lands in the vicinity.

34Accordingly, for the 2016 taxation year, the assessment of the subject property is reduced from $589,000 to $565,000.