Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 25, 2016

FILE NO.: WR 141744

Assessed Person(s): 409315 Ontario Ltd.

Appellant(s): 409315 Ontario Ltd.

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 23

Respondent(s): Township of Zorra

Property Location(s): 92359 Road 92

Municipality(ies): Township of Zorra

Roll Number(s): 3227-013-050-00400-0000

Appeal Number(s): 3058627, 3091345, 3158362 and 3171706

Taxation Year(s): 2014, 2015 and 2016

Hearing Event No.: 627064

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

Heard: July 22, 2016 in Woodstock, Ontario

APPEARANCES:

Parties

Representative

409315 Ontario Ltd.

William John Baker

MPAC

William Somerville

Township of Zorra

Kelly Hall

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property comprises a total of 135.3 acres and is occupied as follows:

• Nine hole golf course – 16.5 acres.
• Year-round land lease retirement community of 72 units – 16.5 acres.
• Seasonal trailer park, with ancillary amenities including a swimming pool, maintenance shop, house for the on-site manager, craft building, washroom buildings, golf cart maintenance building, petting zoo and conservation lands – 102.3 acres.

2For the 2014 taxation year, MPAC returned a current value assessment of $8,673,000, apportioned as follows:

• Residential Property Class - $8,572,940
• Commercial Property Class - $82,425
• Exempt (Conservation Lands Property Class) – $17,635

3MPAC calculated the value using the cost approach on all of the lands, except the retirement community which was valued using the income approach. The 2014 appeal was subsequently deemed for the 2015 and 2016 taxation years. In 2016, after a comprehensive inspection of the subject property, MPAC issued an adjustment to the Current Value Assessment (“CVA”), increasing it to $10,015,365 by way of a correction to the CVA under s. 32 of the Assessment Act (“Act”). This corrected value was apportioned as follows:

• Residential Property Class - $ 9,912,820
• Commercial Property Class - $ 102,545

4The Appellant does not agree with the method of valuation employed by MPAC. He is concerned that the value has risen since the previous valuation date. He further submitted that it was unclear as to how the values of individual trailer units were determined and is equally concerned about how depreciation was factored into the final current value assessment returned. He submitted that the errors on the roll that were identified through an October 2015 inspection highlight that the methods used for valuation are either flawed or are not sufficiently monitored.

5The Assessment Review Board (“Board”) must determine two things in these appeals. Firstly, the Board must determine the current value of the subject property, based on the evidence presented at the hearing. Secondly, when the current value is determined, the Board must also consider the assessments of similar properties in the vicinity and decide if the assessment of the subject property should be reduced for it to be considered equitable.

LEGISLATION

6In making its determination on these appeals, the Board must consider s. 1, s. 19.(1), s. 19.2(1), s. 32 and s. 44.(3) of the Act R.S.O. 1990, c. A.31.

7Section 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.

8Section 19.(1) of the Act states:

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

9Section 19.2(1)3 of the Act states:

Valuation days

19.2 (1) Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

1. 1. For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005.

2. For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.

3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

Exception

(5) Subsection (1) does not apply in respect of the valuation of land for a taxation year after 2004 if the Minister prescribes a different day as of which land is valued for that year.

10Section 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:

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 SUBMISSIONS

12Mr. Somerville provided background to the way campgrounds are valued in Ontario. In 2004 a committee was formed by the Ministry of Finance and MPAC that included campground owners from across the Province to discuss the valuation of properties and to arrive at a method of determining the values of these unique properties.

13The committee opted for the system that is currently in place which, in summary, places valuations on individual units based on the degree of permanency they have on the land they occupy. Other standard valuation criteria such as age/depreciation, quality and location are also considered. According to Mr. Somerville, the value of the subject property has increased since 2004 through regular re-assessments, based on broad market condition changes.

14In preparation for this hearing, Wayne Williams undertook a comprehensive review of the subject property with a view to arriving at a current value that applied the method devised by the committee in 2004. He testified that this inspection involved four MPAC staff members over four days. The inspection uncovered a range of changes in the subject property since its last review. In summary, these changes included:

• Increase in the number of trailer units on the site.
• Changes in location of some units.
• Additions to some units like porches and decks.
• Increase in the number of trailer sites.
• Addition to the number of ancillary buildings and site amenities.

MPAC administered these changes through the application of s. 32 of the Act by applying the new values as correction of errors on the roll.

15In addition, MPAC determined that there were 72 retirement units in the land-lease area as opposed to 71 showing in its previous records. Each of these retirement units includes a land value of $22,444. During the inspection it was determined that, while the retirement community is, for all intents and purposes, ‘year-round’, local by-laws limit the occupancy of each unit to 11 months in any calendar year. As a result, the land value attributed to each unit was reduced by one 12th of the previous total to reflect this restriction in use, to $20,573. The reduced land value was applied to 72 units in MPAC’s revised valuation resulting from the October 2015 inspection.

APPELLANT’S SUBMISSIONS

16Mr. Baker did not bring any documentary evidence of his own to support a lower value. In fact his chief concern is not the returned current value assessment, but rather what he calls the lack of transparency in the methods used for valuation by MPAC and specifically how obsolescence or depreciation of the individual units in factored into the result.

17Mr. Baker sought to impugn the evidence of Mr. Williams which showed varying values on comparable units on the property. Through cross-examination, Mr. Baker asked Mr. Williams to explain what he considered to be discrepancies. The Board heard that any discrepancy would be a result of age, condition and any additional amenities added to one or more units when they were compared to others in the valuation analysis.

18Mr. Baker believes a ‘scale’ should be used as a formula to make determinations of value on individual trailer units that would create an understandable method of valuation. Further, he submitted the methods used need to be monitored more effectively so all campgrounds, like the subject property, are valued the same way across the Province. He pointed to the discrepancy in the values derived from the October 2015 inspection as evidence that MPAC’s approach is fundamentally flawed, and that trailer units should be assessed by formula, rather than by a unit by unit approach. Mr. Baker did not offer an alternative means of valuation.

ANALYSIS

19In his summation, Mr. Somerville made the following points:

• MPAC has provided a comprehensive valuation report based on existing conditions at the subject property as of October 2015.
• The result of the inspection was a value in excess of $10,000,000, but MPAC is not seeking an increase to the returned value.
• The changes reflected in the 2015 inspection must be taken as a whole and portions of the findings cannot be extracted from the whole to make adjustments to the value returned.
• The only evidence at the hearing is that of MPAC. Mr. Baker did not provide an alternative method that produces a different result to refute MPAC’s findings.
• Mr. Baker was a participant in the 2004 committee and would reasonably be expected to understand the valuation methods used.
• Specific methods or approaches to determining current value and the intricacies are outside the jurisdiction of the Board.
• The returned value of $8,673,000 should be confirmed.

20The Board agrees with Mr. Somerville with respect to the facts of the case at hearing. The Board finds that the results of the inspection and the resultant report address all of the elements of the subject property subject to assessment, including reasonable adjustments for depreciation and obsolescence which were specific concerns of the Appellant. The Board also notes MPAC’s reasonableness in not seeking an increase in the current value assessment, which increase is supported by the results of the inspection.

21However, the Board does not agree with Mr. Somerville with respect to the elements of the inspection having to be considered only as a whole. In particular, the Board finds that the value adjustments made to the land portion of the land lease retirement community differ from all of the other adjustments in MPAC’s 2015 valuation. Mr. Williams testified that, owing to local laws, these units can only be occupied 11 months of the year, and MPAC (rightly in the Board’s view) reduced the land value accordingly. This reduction differs as it results from information of administrative pressures in the municipality and not from the physical characteristics of the assessable components of the subject property. The Board views this adjustment as a clear correction of the proper application of the land value and finds the current value is adjusted accordingly.

22The difference in land value per unit determined by MPAC is $1,871. When that figure is applied to 71 units, the reduction is $132,841. The inspection determined that 72 units were actually in place. The Board applies the new land value per unit to the 72nd unit to reduce the amount of the reduction by $20,573, for a total net reduction in land value, in the land lease area of $112,268, or $112,000 rounded.

23By applying this reduction to the residential property class portion of the returned assessment, that value is reduced to $8,460,940.

DECISION

24The Board finds that the current value of the subject property is $8,561,000. In addition, the Board finds that there is no evidence before it to suggest a reduction in this amount is necessary for the purposes of equity.

25Accordingly, the assessment of the property at 92359 Road 92 is reduced from $8,673,000 to $8,561,000 for the s. 40 appeals, 2014, 2015 and 2016 taxation years, and s. 32 appeal, 2016 taxation year is reduced from $10,015,365 to $8,561,000, apportioned as follows:

• Residential Property Class - $8,460,940
• Commercial Property Class – $82,425
• Exempt (Conservation Lands Property Class) - $17,635