Nicola Tamasi and Kim Tamasi v. Municipal Property Assessment Corporation, 2016 CanLII 72414

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 20, 2016

FILE NO.: WR 142343

Assessed Person(s): Nicola Tamasi and Kim Tamasi

Appellant(s): Nicola Tamasi and Kim Tamasi

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 32

Respondent(s): City of Thunder Bay

Property Location(s): 2385 West Riverdale Road

Municipality(ies): City of Thunder Bay

Roll Number(s): 5804-030-106-05800-0000

Appeal Number(s): 3127129, 3128747, 3128836 and 3160723

Taxation Year(s): 2014, 2015 and 2016

Hearing Event No.: 635239

Legislative Authority: Sections 32, 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: August 11, 2016 in Thunder Bay, Ontario

APPEARANCES:

Parties Representative

Nicola Tamasi and Kim Tamasi Self-represented

MPAC Geoff Higginson

City of Thunder Bay Vince Desando

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property is a single family dwelling located along the Kaministiquia River in what is described as a ‘semi-rural’ part of the City of Thunder Bay. The dwelling consists of a first floor of 1,485 square feet (“sq. ft.”) with a partial second storey of 418 sq. ft. The dwelling has a partially finished basement and lies on a lot of 18.7 acres.

2In 2014, MPAC applied a supplementary assessment of $358,000 to the then-existing vacant residential lot. The original assessment was $75,000 resulting in a new, total assessment of $433,000. The supplementary assessment was subsequently revised to $314,000, resulting in a revised assessment of $388,000, effective on August 28, 2014. By way of a correction, MPAC revised the Current Value Assessment (“CVA”) for the 2015 taxation year from $433,000 to $388,000. This amended value was deemed for the 2016 taxation year.

3The value recommended by MPAC was rejected by the Appellant and appeals were filed accordingly. The Appellant believes the assessment is still too high and that the correct assessment should be at or near $300,000, comprised of $69,000 for the original lot and a supplementary assessment of $231,000. There is no dispute with the classification of the property or the effective date of the supplementary assessment.

4The Assessment Review Board (“Board”) must determine a number of things in these appeals. Firstly, the Board must decide the value of the 2014 supplementary assessment. Secondly, the Board must determine the current value of the subject property for the 2015 and 2016 taxation years. Once the current value has been determined, the Board must also decide if, when consideration is made of the assessments of similar properties in the vicinity, the assessment of the subject property should be reduced for the purposes of equity.

LEGISLATION

5In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act (“Act”).

6Section 1 of the Act states:

“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.

7Section 19.(1) of the Act states:

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

8Section 32 of the Act states:

32. (1) Correction of errors, etc., in assessment roll. - Despite the delivery of any notice provided for under this Act, the assessment corporation at any time before the time fixed for the return of the assessment may correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly.

33. (1.1) Same, factual error only. - Despite the delivery of any notice provided for under this Act, for 2009 and subsequent taxation years, the assessment corporation at any time during the taxation year, correct any error in the assessment or classification of a property that has resulted from incorrect factual information about the property, and not from a change in opinion as to current value, and the following rules apply:

9Section 34 of the Act states:

34(1) Supplementary assessments to be added to collector’s roll. – If, after notices of assessment have been given under section 31 and before the last day of the taxation year for which taxes are levied on the assessment referred to in the notices,

(a) an increase in value occurs which results from the erection, alteration, enlargement or improvement of any building, structure, machinery, equipment or fixture or any portion thereof that commences to be used for any purpose;

(b) land or a portion of land ceases,

(i) to be exempt from taxation,

(ii) to be farm lands the current value of which is determined in accordance with subsection 19 (5),

(iii) to be conservation land or managed forests land the current value of which is based on current use under subsection 19 (5.2),

(iii.1) to be land in the managed forests property class the current value of which is determined under subsection 19(5.2) or (5.2.1),

(iv) to be land the current value of which is based on current use under regulations made under subsection 19 (2), or

(v) to be classified in a subclass of real property;

(c) Repealed: 1997, c. 5, s. 22 (1).

(d) a pipeline increases in value because it ceases to be entitled to the reduction provided for in subsection 25(9), the assessor may make the further assessment that may be necessary to reflect the change, and the clerk of the municipality upon notification thereof shall enter a supplementary assessment on the tax roll and the amount of taxes to be levied thereon shall be the amount of taxes that would have been levied for the portion of the taxation year left remaining after the change occurred if the assessment had been made in the usual way.

10Section 40 of the Act states:

40.(1) Appeal to Assessment Review Board. Any person, including a municipality, a school board or, in the case of land in non-municipal territory, the Minister, may appeal in writing to the Assessment Review Board,

(a) on the basis that,

(i) the current value of the person’s land or another person’s land is incorrect,

(ii) the person or another person was wrongly placed on or omitted from the assessment roll,

(iii) the person or another person was wrongly placed on or omitted from the roll in respect of school support,

(iv) the classification of the person’s land or another person’s land is incorrect, or

(v) for land, portions of which are in different classes of real property, the determination of the share of the value of the land that is attributable to each class is incorrect; or

(b) on such other basis as the Minister may prescribe.

11Section 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.

DECISION

12The Board finds the current value of the subject property is $388,000. When reference is made to the assessments of similar properties in the vicinity, the Board finds this value is reduced to $357,000 to reflect equitable assessment.

13For the 2015 taxation year, the assessment of the property at 2385 West Riverdale Road is reduced from $433,000 to $357,000. For the 2016 taxation year, the assessment is reduced from $388,000 to $357,000. For the August 28, 2014 s. 34 supplementary assessment, the value is reduced from $358,000 to $282,000. For the January 1, 2015 s. 32 corrected assessment, the value is reduced from $388,000 to $357,000. All of the above assessments are in the Residential Property Class.

MPAC’S EVIDENCE

14Mr. Higginson prepared a valuation study to determine MPAC’s valuation of the subject property for the 2015 and 2016 taxation years. He applied the direct comparison approach to value, where comparable properties and their sale values are used to provide an indication of the current value of the subject property.

15Mr. Higginson compared the subject property to six single family dwellings that sold between February 2009 and November 2011. Each of the six sale values were adjusted by Mr. Higginson to reflect the impact of time on these sale values in his analysis. The Time Adjusted Sales (“TAS”) allow the sale values of the comparable properties to be compared to the subject property as though they sold at or near the statutory valuation date of January 1, 2012.

16Sale A sold in January 2011 for $354,000 with a TAS value of $391,651. It was built in 1992 with a quality rating of 7.0. It is a two-storey dwelling of 2,379 sq. ft. of living area and a 491 sq. ft. attached garage. Sale A includes a lot of 2.86 acres.

17Sale B sold in October 2011 for $558,000 with a TAS value of $571,197. It was built in 2009 with a quality rating of 7.0. It is a two-storey dwelling with 2,603 sq. ft. of living area and includes an attached garage measuring 492 sq. ft. The dwelling is situated on a lot of 3.33 acres.

18Sale C sold in June 2009 for $305,500 with a TAS value of $377,250. It was built in 1995 with a quality rating of 7.0. It is a two-storey dwelling with 2,124 sq. ft. of living area and also has an attached garage of 648 sq. ft. Sale C includes a lot of 2.34 acres.

19Sale D sold in February 2009 for $375,000 with a TAS value of $475,045. It was built in 2003 with a quality rating of 7.0. It is a two-storey dwelling of 1,701 sq. ft. of living area and has an attached garage of 610 sq. ft. The dwelling is situated on a lot of 2.31 acres.

20Sale E sold in June 2011 for $375,000 with a TAS value of $397,887. It was built in 2004, with a quality rating of 7.0. It is a two-storey dwelling comprised of 1,902 sq. ft. of living area and has a detached garage measuring 855 sq. ft. Sale E includes a lot of 0.99 acres.

21Sale F sold in November 2011 for $474,900 with a TAS value of $481,648. It was constructed in 2010, with a quality rating of 7.0. It is a two-storey dwelling with 1,608 sq. ft. of living area with an attached garage of 443 sq. ft. and a detached garage of 736 sq. ft. Sale E includes a lot of 0.46 acres.

22Mr. Higginson considers Sales A, C, D, E and F to be relatively comparable to the subject property. Sale B is considered to be superior in value when compared to the subject property, indicating that the high end of the range of value expected for the subject property ois$571,197.

23Mr. Higginson made adjustments to each of the six TAS values to compare them more directly while accounting for their respective differences. Once these adjustments for age, location, and dwelling and property size were made, Mr. Higginson testified that the 2015 CVA of $388,000 is reasonable and correct, noting that this value equates to a supplementary assessment, effective August 28, 2014 of $314,000.

24As part of his valuation report, Mr. Higginson included an Equity Study to show how similar properties in the vicinity of the subject property are assessed. The study included the TAS values of 30 residential properties in the vicinity and a comparison of those values with the corresponding 2012 CVAs for each property in the study. Mr. Higginson found that by using these 30 sales the median Assessment to Sale Ratio (“ASR”) was 0.97, meaning that on balance, similar properties in the vicinity of the subject property are assessed slightly below their corresponding TAS values. According to Mr. Higginson, there is no reason therefore to reduce the current value found as it is already equitable when compared to these other properties.

APPELLANT’S EVIDENCE

25Mr. Tamasi did not seek to refute MPAC’s evidence directly. Instead, he submitted that the comparable properties used by MPAC differ sufficiently from the subject property that they cannot be used as indicators of its current value. To support this view, Mr. Tomasi submitted:

• The subject property has a wood foundation, which is relatively uncommon and Mr. Tamasi believes that the comparable properties in MPAC’s report do not include this unique feature;
• The subject property, when purchased originally by Mr. Tamasi, included private hydro-electric power to three of the property’s neighbors. The electrical service crossed the subject property to service three other properties and where it crosses the subject property, it is considered to be private infrastructure. This is in contrast to MPAC’s comparable properties which do not include private electricity service to neighboring properties;
• The subject property is served by a driveway from the public road that is approximately 1 kilometer in length. This requires Mr. Tamasi to clear snow in the winter over a long distance and to otherwise maintain the long driveway in the spring, summer and fall;
• The subject property does not have municipal water service and draws its domestic water supply from a private well;
• The front portion of the subject lot is ‘swampy’ in nature and Mr. Tamasi had to go a large distance from the public road to build the subject dwelling on suitable founding soils;
• The subject dwelling is heated with a forced air propane heating system as the long distance from the road to the dwelling makes natural gas service unaffordable.

26Mr. Tamasi provided comparable properties of his own to support a current value lower than that returned by MPAC. He drew these comparisons from a document called ‘My Neighbourhood Properties of Interest’, which appeared as part of Exhibit 2. In this summary of other properties, Mr. Tamasi pointed out that for all but two of the 15 properties he selected for comparison, the assessments were lower than that of the subject property. Of the two properties that had higher assessments in the sample, one was a ski resort, (which Mr. Tamasis acknowledged is valued differently that the subject property) and the second was a reasonable comparable single family dwelling to his own, but which is substantially larger. Mr. Tamasi was not able to differentiate between these comparable properties and his own, except by offering photographs of the exteriors of some.

27Mr. Tamasi concluded that, while he was not able to specify what the lower current value would be for the subject property, he believes that it should be less than the reduced, recommended value from MPAC and that something closer to $300,000 would be appropriate.

ANALYSIS

28The subject property is clearly unique in its attributes and the characteristics that typically drive the valuation of single family dwellings. The Board accepts Mr. Tamasi’s testimony with regard to the foundation of the building, the lack of municipal water, natural gas service and the extreme length of the driveway. The Board found him to be credible and knowledgeable in the area of home construction. All of these things, would normally serve to reduce the value of this property when compared to an identical property without these shortcomings. What Mr. Tamasi was not able to do however, was to specify what the values, supported by documentary evidence of the shortcomings, are and what impact they have on the value of the property.

29By contrast, Mr. Higginson’s valuation report made specific adjustments to the values of other properties in the area, and by accounting for their differences, was able to arrive at a range of value that would reasonable apply to the subject property, despite its uniqueness. While all six properties in Mr. Higginson’s comparison assist is creating a range of value when compared to the subject property, the Board finds the most comparable to be Sales A and E. Both of these properties sold in 2011, within 12 months of the valuation date, and the TAS values are not subject to inaccuracies that may occur when properties that sold further from the valuation date are used. For this reason, the Board disregards Sales C and D as they sold in 2009; 30 to 35 months from the valuation date. The Board finds that Sales B and F are the least comparable to the subject property owing to their characteristics, and disregards them as a result.

30The TAS values of Sales A and E are $391,651 and $397,887. Sale A is older, but larger than the subject property and the Board finds these characteristics serve to equalize in comparison as the rest of the characteristics are relatively comparable to the subject property. Sale E is the same size as the subject property, is slightly older but with a larger detached garage. Again, the Board finds these differences in characteristics equalize when a full comparison is made.

31The Board finds that the most compelling evidence with respect to current value is that of MPAC and further finds that the relatively small difference between the values of the most comparable properties in Mr. Higginson’s market analysis serve to support the recommended value of $388,000.

32The Appellant’s efforts in presenting the CVAs of 15 other properties was not helpful in determining current value. However, they did raise some doubt with respect to equity of assessment in the residential property class in the vicinity of the subject property. Mr. Higginson’s equity study relies on ASR to determine whether or not a specific property’s current value should be reduced for an assessment based on equity.

33The application of ASRs is a common approach to determining equitable assessment. Mr. Tamasi questioned the selection of the 30 properties in the vicinity and noted that, despite there being more properties with an ASR below 1.0, the median seemed to be very close to 1.0. When the equity study is reviewed in more detail, the Board notes that it omits the sales and assessments from the six properties in the valuation study for current value. It would seem that, given these six properties are considered the most comparable for the purpose of comparison to the subject property, they should also meet the definition of similar in the equitable assessment part of s. 44.3(b) of the Act.

34The Board notes that five of these comparable properties have both their TAS value and assessment in evidence. When the five resultant ASRs (ranging from 0.73 to 0.92) of the comparables are added to MPAC’s 30 properties, the median ASR of the larger sample drops to 0.92 without any noticeable impact on the Coefficient of Dispersion cited in the study. The Board finds that this ASR of 0.92 is the best evidence at hearing to indicate the median ASR of similar properties in the vicinity. Accordingly the Board finds that the assessment of the subject property is reduced, for the purposes of equitable assessment, from $388,000 to $356,960 ($357,000 rounded).

DECISION

35The Board finds the current value of the subject property is $388,000. When reference is made to the assessments of similar properties in the vicinity, the Board finds this value is reduced to $357,000 to be equitable.

36For the 2015 taxation year, the assessment of the property at 2385 West Riverdale Road is reduced from $433,000 to $357,000. For the 2016 taxation year, the assessment is reduced from $388,000 to $357,000. For the August 28, 2014 s. 34 supplementary assessment, the value is reduced from $358,000 to $282,000. For the January 1, 2015 s. 32 corrected assessment, the value is reduced from $388,000 to $357,000. All of the above are the Residential Property Class.