2405124 Ontario Ltd. v. Municipal Property Assessment Corporation, 2016 CanLII 80444

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 18, 2016

FILE NO.: 142342

Assessed Person(s): 2405124 Ontario Ltd.

Appellant(s): 2405124 Ontario Ltd.

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

Respondent(s): City of Thunder Bay

Property Location(s): Red Pine Way

Municipality(ies): City of Thunder Bay

Roll Number(s): 5804-020-105-17902-0000

Appeal Number(s): 3136933 and 3160788

Taxation Year(s): 2015 and 2016

Hearing Event No. 635239

Legislative Authority: Section 32 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: August 11, 2016 in Thunder Bay, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

2405124 Ontario Ltd.

Ian Bodnar

MPAC

Thomas Pesek

City of Thunder Bay

Vince Desando

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property has no municipal address and is located in an undeveloped part of the City of Thunder Bay. It lacks frontage on a municipally owned, public road and is considered unbuildable as a result. In 2014, the subject property was created through a severance application under the Planning Act. It comprises an area of just under five acres, with site dimensions of 360 feet by 603 feet. Red Pine Way, in the vicinity of the subject property is not an open road allowance.

2For the 2015 taxation year, MPAC returned a current value assessment (“CVA”) of $7,200.

3The Appellant believes the assessment returned is too high, for two reasons. Firstly, he believes the comparable properties used by MPAC are not suitably similar to the subject property to be used for the purposes of its valuation. Secondly, the Appellant submitted that land use planning restrictions in place on the subject property make it relatively unique when the planning characteristics of the properties used by MPAC are considered.

4The Assessment Review Board (“Board”) must determine the current value of the subject property, based on the evidence at the hearing. Secondly, the Board must decide, when reference is made to the assessments of similar properties in the vicinity, if the assessment of the subject property should be reduced for its assessment to be equitable.

DECISION

5The Board finds that the current value of the subject property is $7,200. The Board finds further, that there is no evidence before it to indicate this value should be reduced for the purposes of equitable assessment.

6For the 2015 and 2016 taxation years, the assessment of the subject property is confirmed at $7,200 in the Residential Property Class.

Legislation

7In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act (“Act”).

8Section 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.

9Section 19.(1) of the Act states:

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

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 or 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.

MPAC’s Evidence

12Thomas Pesek prepared a valuation study to compare the sale values of six properties to the subject property. He explained that the comparable properties were selected, using the following criteria:

• Size in comparisons to the subject property;

• Comparable properties had to be vacant; and

• Comparable properties had to be either ‘land locked’ or not fronting on a municipally maintained roadway.

13The six properties in Mr. Pesek’s valuation report were described as follows:

• Sale A – 517 Toledo Street is a vacant parcel, 0.11 acres in size with a frontage of 48 feet on Toledo Street, which is an unopened road allowance. This property is located across Toledo Street from multi-family residential development. Sale A sold in June 2012 for $5,500 and has a time adjusted sale (“TAS”) value of $5,398.

• Sale B – Ottawa Street is a vacant parcel of 0.47 acres in size. It has 162 feet of frontage on Ottawa Street, which is unopened in the vicinity of the property. Sale B sold in June 2012 for $32,500 and has a TAS value of $31,895.

• Sale C – 370 Colville Avenue is also vacant, with a frontage of 120 feet and a site area of 0.82 acres. Sale C has a sale price of $12,000, which was time-adjusted by Mr. Pesek to reflect the difference in value from the valuation date to the sale date of April 2011. The TAS value is $12,401.

• Sale D – at 360 Colville Avenue sold in July 2012 for $12,500, with a TAS value of $12,228. It has a frontage of 120 feet and a site area of 0.82 acres.

• Sale E – 366 White Park Road is a vacant parcel of five acres. It sold in March of 2008 for $7,700. Owing to the time difference between the sale and the valuation date, Mr. Pesek did not adjust the sale value for impact due to the passage of time.

• Sale F – 4586 Sifton Avenue is a 0.22 acre property that sold in March 2011 for $5,400, with a TAS value of $5,604.

14Mr. Pesek testified that he believed his analysis provides a reasonable range of value when the characteristics of the properties in his study are compared to the subject property, and differences between them are taken into account. He considers all six properties to be relatively comparable to the subject property. He believes the characteristics of Sale E at 366 White Park Road are the most comparable to the subject property. Accordingly, Mr. Pesek testified the returned value of $7,200 is reasonable and therefore correct.

Appellant’s Evidence

15Ian Bodnar took two approaches to challenging the value returned by MPAC. Firstly, he provided sales information for 20 properties, with similar characteristics to the subject property. These 20 properties were all considered to be land locked and without municipal services or access to a public road. Of these 20 property sales, four occurred in 2015 and two occurred in 2016. The Board disregards these properties as the sale dates occurred from February 2015 to April 2016, 37 to 51 months after the statutory valuation date of January 1, 2012. No time adjustment was offered by Mr. Bodnar to compare the sale values to the subject property.

16Five of the sales in Mr. Bodnar’s evidence occurred in August 2006, 65 months before the valuation date. No time adjustments were made for these sale values, and the Board disregards these sales as a result. Mr. Bodnar also submitted two sales that were transferred between an estate and a purchaser, and between two persons with the same surname. The Board disregards these sales as well, owing to the sales being potentially not on the open market.

17The remaining seven sales occurred in 2008, 2012 and 2013. Their characteristics are summarized as follows:

• 823 Ottawa Street – Sold in July 2008 for $4,001. The property is ¼ acre in size and is within what is known as Plan 364 McIntyre, as subdivision with similar characteristics as the subdivision where the subject property exists.

• Toledo Street – This property was also submitted by MPAC as ‘Sale A.’

• Part Lot 2, Plan 267 McIntyre – Sold in August 2008 for $3,000 and is described as ‘Land Locked’, with no warranty by the seller as to lot dimensions, but is described as being under 0.50 acres in size.

• 395 Morecombe Avenue – A 0.80 acre property that sold in April 2013 for $6,000.

• 417 Lancaster – Sold in April 2013 for $6,000. It is 0.80 acres in size.

• 425 Lancaster – Also sold in April 2013 for $6,000 and is 1.13 acres in size.

• 1350 Pennington Avenue – 0.70 acres in size. Sold in February 2008 for $13,000.

18Mr. Bodnar submits that the entire list of properties in his sample indicates that landlocked properties with similar characteristics as the subject property have a range of value determined by sales and that the list of 20 properties taken together indicate that the subject property is assessed too high and its assessment should be reduced to something in the range of $4,000.

19To deliver his second challenge to the assessment of the subject property, Mr. Bodnar called Mr. Huzan, an experienced land use planner who used to be employed by the City of Thunder Bay and who now provides land use planning consulting services in the area.

20Mr. Huzan provided a summary of the land use regulations in Thunder Bay that apply to the subject property. It is in the RU1 zone and lies within the Rural Official Plan designation. Mr. Huzan testified that the effect of these land use controls is that the subject property cannot currently be developed and that, given the current Official Plan designation, is not at all likely to be developed within the current ‘planning horizon’ which he estimates at 20 years. He added that the current Official Plan is being reviewed and amended by the City as part of the statutory five year review in the Planning Act and that the subject area will not change its designation in the current review. According to Mr. Huzan, this would suggest the subject property could not be developed well beyond the previously mentioned 20 year planning horizon once the new Official Plan is approved.

21Mr. Huzan added that, in the context of his review, ‘development’ means the ability to obtain a building permit for the subject site. As the subject site is not within an area designated for development, Mr. Huzan is of the opinion that the subject site can only be used for existing uses, which in this case means its present use (vacant) or a very short list of rural uses. He concluded that the property does not have access to a public street and that the nearest connection would be several lots away from the existing Red Pine Way. Those properties currently fronting on the opened portion of Red Pine Way are in a much more permissive zone and official plan designation according to Mr. Huzan.

22Mr. Bodnar submits that, given the land use restrictions on the subject property, comparison to other properties as submitted by MPAC are not equivalent and therefore are unreliable for the purpose of arriving at a current value for the subject property. Further, he submits that the best comparable properties to make this determination are the ones in his sample that have similar land use restrictions, with the most comparable being those in the ‘McIntyre’ plans.

Analysis

23When considering the comparable properties put forward by the parties, it is not essential that they be identical to the subject property. They only need to be suitably similar so that reasonable adjustments can be made to their characteristics so that they can be compared to the subject property for the purpose of determining its current value.

24In Mr. Bodnar’s sample of comparable sales, the majority sold on dates too far removed from the valuation date. The remaining sales in his sample are for properties that are far smaller than the subject property and as a result, do not adequately reflect the size of the subject property. According to Mr. Bodnar, a building lot is a building lot in this market and aside from meeting minimum size requirements for building a dwelling, the size of the property does not matter until it is large enough to support more than one dwelling or a development of several buildings. None of the properties in his sample are large enough for that purpose and for that reason he believes that the prices shown are reflective of single family dwelling lots in the more rural areas of Thunder Bay.

25Mr. Pesek provided six comparable sales that also reflected lot sizes that were much smaller than the subject property; all under one acre in size, with one exception. Mr. Pesek’s Sale E is a five acre property in a rural area of the City that sold for $7,700. He suggests this is the best indicator of value in his sample, and the Board agrees as it relates to lot size.

26However, Mr. Pesek’s comparable properties vary greatly with respect to the future use of these vacant parcels. It is clear from the photographic evidence and the evidence of Mr. Huzan, that the subject property is quite different in its zoning and official plan as they relate to the development potential of the land. The zoning by-law prohibits any use other that what is existing, and the Official Plan excludes that subject property from any additional use for the next 20 years or so. For any comparable properties to be useful in determining the current value of the subject property, the planning controls must be considered as well as size and location.

27The Board finds that the comparable properties on Toledo Street and Colville Avenue are not suitably similar, as their location is much more urban than the subject property and they do not have the same land use restrictions as the subject property.

28MPAC’s comparable Sale E on White Park Road has similar restrictions on access. It is landlocked and has no frontage on an opened road allowance. What is most similar to the subject property is its zone of RU1, which is the same as the subject property. Sale E is of the same size and land use restriction and has a sale value of $7,700. Sale E is the only comparably sized parcel with the same restrictions as the subject property in evidence.

29Mr. Bodnar takes issue with Sale E as it is not as close geographically to the subject property as many of the comparable properties in his sample. The Board is convinced by the uniqueness of the property and its restrictions that Sale E, while farther from the subject property than other comparable properties in evidence, is most similar and represents the best indication of current value of the subject property. The Board agrees with Mr. Pesek, that the returned value of $7,200 is reasonable in comparison to other properties in the area.

CONCLUSION

30The Board finds that the current value of the subject property is $7,200. The Board finds further, that there is no evidence before it to indicate this value should be reduced for the purposes of equitable assessment.

31For the 2015 and 2016 taxation years, the assessment of the subject property is confirmed at $7,200, in the Residential Property Class.