Attwood v. Municipal Property Assessment Corporation, Region 17, 2016 CanLII 76501

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: November 02, 2016

FILE NO.: WR 141342

Assessed Person(s): William Alfred Attwood and Katherine Arlene Attwood

Appellant(s): William Attwood and Katherine Attwood

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 17

Respondent(s): Township of Georgian Bay

Property Location(s): 224 IS 120 Six Mile Lake

Municipality(ies): Township of Georgian Bay

Roll Number(s): 4465-030-002-00406-0000

Appeal Number(s): 3123637 and 3155483

Taxation Year(s): 2015 and 2016

Hearing Event No.: 626014

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

Heard: June 24, 2016 at Port Severn, Ontario

APPEARANCES:

Parties	Representative
William Alfred Attwood	Self-represented
Katherine Arlene Attwood	William Attwood
MPAC	Michelle D’Andrea
Township of Georgian Bay	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

INTRODUCTION

1William Alfred Attwood and Katherine Arlene Attwood (the “Appellants”) appealed the 2015 and 2016 assessments for their seasonal recreational dwelling located on Six Mile Lake in the Township of Georgian Bay. The hearing took place on June 24, 2016; the decision was reserved at the request of the Appellants.

2The subject property is located on the shores of Six Mile Lake, which is a lake located close to Georgian Bay. The property is classified as residential land, a point that is not disputed. The dwelling was constructed in 2010 and is a good quality building on a site area of 1.14 acres with an effective frontage on Six Mile Lake of 480 feet. The current value was returned in the amount of $797,000 for 2015. The Municipal Property Assessment Corporation (“MPAC”) reduced the value in 2016 to $677,000, and recommend that value for 2012 through 2016, the current valuation cycle. The Appellants have not accepted that recommendation and argue that, based on sales of similar properties in the vicinity, the current value as of January 1, 2012, should be $527,000.

ISSUES

3What is the current value of the subject property for 2015 and 2016?

4Is 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

5The Board determines that the current value of the subject property is $677,000.

6The 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.

7Accordingly, the assessment of the subject property as at January 1, 2012, for the 2015 taxation year is reduced from $797,000 to $677,000. The assessment for 2016 is confirmed at $677,000.

Evidence

8Michelle D’Andrea presented evidence on behalf of MPAC. She filed Exhibit 1, a comprehensive package of information including specifics about the subject property and about six comparable seasonal recreational properties located on Six Mile Lake and sold between September, 2009, and October, 2012. Exhibit 1 also contained Ms. D’Andrea’s evidence related to the time adjustment factors employed and her Equity Analysis. Respecting the overall changes in prices over time, the evidence included Sale to Assessment Ratios based on 400 sales of residential properties in the area of the subject property over a period of 40 months from September, 2009, to December, 2012. The overall change in house prices was found to be an increase of 9.41%.

9Ms. D’Andrea testified that the subject property was built in 2010, includes one fireplace and two full bathrooms, and consists of a first floor of 1,774 square feet (“sq. ft.”) and a second floor of 504 sq. ft. for a total building area of 2,278 sq. ft. The site is 1.14 acres with frontage of 527.30 feet (“ft.”) on Six Mile Lake, with an effective frontage of 480 ft. There is a small cabin of 192 sq. ft. also located on the site. Access is by water only.

10The current value of residential properties is usually derived using comparative sales of similar homes and similar properties in the neighbourhood or nearby vicinity. Sales occurring at or near the valuation day – January 1, 2012 - will assist in giving the most accurate assessments of value. However, in neighbourhoods such as this one, the exercise becomes more challenging where few sales of comparable properties have occurred near the valuation day. This is clearly the difficulty encountered by MPAC in assessing the subject property.

11Ms. D’Andrea provided details of six comparable sales occurring between September, 2009 and October, 2012. Five of the six sales occurred within twelve months of the valuation day.

12However, the six sales fluctuate significantly in features, quality and price, with selling prices between $370,000 and $1,000,000. Four of the properties are accessible by road while only two, like the subject property, are accessible only by water. These two (Sales A and B) are also the least expensive of the six properties, having sold for $370,000 and $399,900. The subject property is clearly more valuable than Sales A and B because it has over twice as much frontage on the lake, has a building measuring approximately twice the floor area of the residences in Sales A and B, and has a superior quality of construction.

13The other four comparable sales are accessible by road. All are deemed superior to the subject property and sold for values between $875,000 and $1,000,000. While these properties are all different, all are reasonably comparable in quality to the subject property. Only one has more effective frontage (Sale C is two feet larger); however all four have larger site areas. All four of these comparable sales have detached garages that are considerably larger than the subject property’s cabin. The properties described as Sales A, C, D and F have additional outbuildings (or, in the case of Sale F, a residence above the garage). These outbuildings include cabins, sheds, and boathouses. All the cabins are larger than the subject property’s cabin of 192 sq. ft.

14Ms. D’Andrea argued that Sale C located at 108 Moccasin Trail was the most comparable property to the subject property. It sold within four months of the valuation day for $935,000, which was time-adjusted to $929,527. Various features of Sale C, such as road access, its boathouse, shed and detached garage, plus a site area of 3.4 acres, make Sale C more valuable than the subject property.

15Mr. Attwood filed a package of exhibits marked collectively as Exhibit 2. It included an aerial photograph of the property, a view of the wooded shoreline, and a photograph of the slope from the cottage to the shore which he notes drops 17 ft. in height over 10 linear ft. Mr. Attwood also included a receipt for his mainland parking space which costs him $791 for the season.

16Mr. Attwood provided evidence of sales of seasonal recreational properties sold on Six Mile Lake and Go Home Lake nearby. While the evidence was provided in the form of real estate listings verifying sale prices and closing dates, it served to introduce sales of more water access only properties comparable to the subject property. While the sales occurred later in the assessment cycle than preferred, the values of these four examples showed sales prices between $485,000 and $555,000. The Appellant’s four comparable sales are summarized in the following chart.

TABLE 1: APPELLANT’S SALES

	SUBJECT PROPERTY	1) 9344 Go Home Lake	2) 1320 IS 360 Six Mile Lake	3) 224 IS 360 Six Mile Lake	4) 2600 IS 360 Six Mile Lake
Frontage (ft.)	480	207	192	480	189
Site Size	1.14 ac.	1.02 ac.	Less than 1 acre.	3 ac.	1.14 ac.
Cottage Size (sq. ft.)	2,278	1,578	2,188	1,000	1,541
Other Structures	Cabin 192 sq. ft.	Cabin (unknown)	None	Gazebo	Storage Building
Owned Mainland Docking	No	No	No	Yes	Yes
Sale Price		$555,000	$512,760	$485,000	$485,000
Sale Date		10-Oct-2014	16-Sep-2015	22-Aug-2013	31-May-2014

17The four comparable sales took place 20 months or more after the valuation day, which detracts from their reliability as true comparable sales. In addition, three of the four (identified as numbers 1, 3 and 4) have significantly smaller residences. While comparable 2 has a residence of a similar size to the subject property, the waterfront is less than half the size. In addition, this property sold over three years after the valuation day, which significantly detracts from its value as a comparable sale.

Determination of Current Value

18Section 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.”

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

Assessment based on current value

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

20The 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.

21To 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 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, and so on. Where properties are accessible by water only, proximity to the mainland is another factor which may influence value. Seasonal/recreational properties are very seldom directly comparable because no two are alike. Therefore, particular attention must be paid to the comprehensive description of each comparable property.

22In the instant case, none of the comparable sales provided by either party is similar enough to the subject property to provide assistance in determining its current value. However, the variety of features and the spread of values taken together assists the Board by setting out examples of seasonal residential properties both higher and lower in value than the subject property. Mr. Attwood’s four comparable properties and MPAC’s Sales A and B are all examples of less valuable properties by virtue of their smaller residences, smaller waterfronts, or much smaller site areas. MPAC’s Sales C through F were examples of more valuable properties, all accessible by road, all with larger or higher quality dwellings and/or additional cabins or boathouses. The Board concludes that the cumulative effect of all ten comparable sales was to show that the value of the subject property was satisfactory.

23Mr. Attwood also led evidence of the existence of a steep slope between the residence and the shore using photographs. He argued that this was not taken into consideration by MPAC in its assessment. Mr. Attwood provided no evidence as to the effect on the property’s value that this factor may have had. The Board finds, that in the absence of evidence of value, it cannot reduce the current value of this property based on the presence of the slope.

Equity

24Once the Board has determined the current value of the land, it is required by s. 44.(3)(b) of the Act to:

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.

25On the issue of equity, the Board received an Equity Analysis based on 50 sales within 4.11 kilometres of the subject property between September, 2009 and December, 2012. The sales had a median Assessment to Sales Ratio (“ASR”) of 1.01. A median ASR of 1.0 would indicate that the model has correctly predicted the value of a property. Where the median value falls below 1.0, it is indicative that the model is underestimating values; where it falls above, it is an indicator of overestimation of values. The Board has generally accepted that a variation of 5% either way of the correct value (0.95 to 1.05) is a tolerable variation and, in the absence of other or contradictory evidence, leads to a finding that the assessment is equitable. In this case, Mr. Attwood did not provide evidence on this issue, and the Board accepts that the assessment is equitable.

CONCLUSION

26The Board determines that the current value of the subject property is $677,000.

27The 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.

28Accordingly, the assessment of the subject property as at January 1, 2012, for the 2015 taxation year is reduced from $797,000 to $677,000. The assessment for the 2016 taxation year is confirmed at $677,000.