Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 24, 2016 FILE NO.: WR 141243

Assessed Person(s): Rachelle Archambault Appellant(s): Rachelle Archambault Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 03 Respondent(s): City of Ottawa

Property Location(s): 2250 Sixth Line Road Municipality(ies): City of Ottawa Roll Number(s): 0614-300-815-27501-0000 Appeal Number(s): 2994708, 3004889, 3070847 and 3144388 (deemed 2016 appeal) Taxation Year(s): 2013, 2014, 2015 and 2016 (deemed appeal) Hearing Event No. 609340

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

Heard: January 19, 2016 in Ottawa, Ontario

APPEARANCES:

Parties Representative

Rachelle Archambault Glenn Lucas

MPAC Laura Kelleher

City of Ottawa No one appeared

DECISION OF THE BOARD DELIVERED BY TERRY DENISON

INTRODUCTION

1The subject property is classified as Vacant Residential/Recreational Land on Water. It is a large parcel of 139.57 acres with 1,700 feet of frontage on Sixth Line Road in the rural Kanata area of the City of Ottawa near the village of Dunrobin. It also has extensive frontage on the Ottawa River of approximately 1,700 feet. The site is relatively level, except there is a steep drop-off to the river at the shoreline, and there is a mixture of mature tree covered parts and some cleared areas throughout the site. The shoreline is rocky. Although the subject property is not developed there are large estate lots in the vicinity that have been improved with large high-end residences. Municipal sewer and water services have not been extended to this area, but Sixth Line Road is a well-maintained paved road. The subject property has very good views of the Ottawa River and the Gatineau Hills across the river.

2MPAC assessed the subject property for the taxation years using a January 1, 2012 valuation day with a current value of $1,876,000. This is an increase of $92,000 over the assessments using a January 1, 2008 valuation day when the property was assessed at $1,784,000. MPAC recommended at the commencement of the hearing that the assessment be reduced to $1,852,000 because of the variable waterfront.

3The Appellant says that the assessment of the subject property is too high and sought a reduction based on the evidence lead during the hearing.

Issues

4What is the correct current value of the subject property?

5Must the assessment of the subject property be adjusted to achieve equity with the assessment of similar properties in the vicinity?

Decision

6The correct current value of the subject property is $1,200,000 and there is no evidence to support a further adjustment of the assessment to make it equitable with the assessment of similar properties in the vicinity. Consequently the assessment of the subject property should be reduced from $1,876,000 to $1,200,000 for taxation years 2013 to 2016 based on a January 1, 2012 valuation day.

The Legislation

7The initial task for the Assessment Review Board (“Board”) is to determine the current value of the subject property as required by s. 44. (3)(a) of the Assessment Act (“Act”).

8Section 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.

9Section 19.2(1)(3) 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, the valuation day.

10In 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.

11Section 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.

12After hearing the evidence and the submissions of the parties, the Board shall determine the matter pursuant to s. 40.(19) of the Act.

MPAC’s Position

13MPAC called Mark Hotte to give evidence on the assessment of the subject property. Mr. Hotte is a Property Valuation Analyst with MPAC and has been employed by MPAC since 2005. He has a Bachelor or Arts from Carleton University and he has the designation AIMA of the Institute of Municipal Assessors. As well, he has taken courses through the University of British Columbia in the Diploma Program in Urban Land Economics leading to an AACI designation. He is an experienced assessor. He indicated that, although he is an employee of MPAC, his evidence before the Board must be fair, objective and non-partisan and that his duty to assist the Board must prevail over any obligation he might owe to any party by whom or on whose behalf he might be engaged. His qualifications to provide expert evidence on assessment were not challenged by Glenn Lucas, the Appellant’s representative. The Board found that Mr. Hotte was qualified to give opinion evidence on assessment and valuation.

14Mr. Hotte prepared a Valuation Report for this hearing, which was filed as Exhibit 3. He relied on a Direct Comparison Approach to Value by selecting other residential properties in the vicinity of the subject property.

15He noted that the Land Registry records showed that there had been a transfer of the subject property in 1999 for $1,200,000 and a subsequent transfer in 2007 for $1,800,000.

16His analysis considered the sales of three properties that occurred between December 2009 and December 2012. For comparison he calculated a time adjustment of the sales to compare them with transactions that would have occurred on the statutory valuation day, January 1, 2012.

17Mr. Hotte found three sales that he thought were relevant. All had some water frontage on the Ottawa River. He noted that there were no valid sales of vacant waterfront properties of similar acreage or water frontage to that of the subject property. The three sales he selected were significantly smaller in terms of acreage and water frontage and he considered them to be inferior to the subject property.

18The first property was 3286 Barlow Crescent. It had 1635 feet less frontage and a significantly smaller lot size than the subject property. It had a time adjusted sale price of $287,047. Because he considered this property to be inferior he reasoned that the subject property would have a greater value.

19The second property he selected was 3210 Barlow Crescent, which has 1503 feet less frontage and a significantly smaller lot than the subject property. It had a time-adjusted sale price of $606,131 and he considered that the subject property was superior and would have a value higher than this amount.

20The third property selected was 2872 Barlow Crescent, which had 1598 feet less frontage than the subject property. It had a time adjusted sale price of $422,706.

21Mr. Hotte acknowledged that he had difficulty finding sales of properties that were good comparables for the subject property. Because of the lack of good comparables he felt it was necessary to find a way to adjust or model the data from the sales he had to be able to use to find the value of the subject property. One model was a rate derived from the actual water frontage, another used the square root of the water frontage, another model used the square root of the water frontage and the square root of the acreage, and a fourth was modeled from the square root of the water frontage and the natural “logarithm of the acreage”. Applying these derived rates to the dimensions and area of the subject property produced derived values for the subject property that ranged from a high of $5,764,700 to a low of $1,697,318. The highest being from a rate using the actual water frontage and the lowest from a rate using the square root of the water frontage.

22Mr. Hotte made reference to an Ottawa Real Estate Board listing of the subject property in 2013. A copy of the listing was included in his valuation report. The asking price in the listing was $2,350,000. The listing included a description of the property:

Well located amongst prestigious estates, this buildable waterfront site is situated on approximately 139 acres. This rare property offers waterfront and Gatineau Hills views with mature trees and is not yet developed. This fantastic site is located only minutes from Kanata and is one of Ottawa’s truce Dream Properties.

23Mr. Hotte said that he was not aware of any offers resulting from this listing.

24In his report and orally Mr. Hotte stated that he believed, based on a communication with the City’s Planning Department, that there was a possibility of at least one severance of the property so that at least two building lots could be created. He pointed to limitations on development in an e-mail from the City’s planner which included:

Only two lots for residential purposes permitted.

The creation of any new lot must conform to the Minimum Distance Separation as amended from time to time. In this instance, the separation distance is intended to reduce the likelihood of adverse impacts from new residential development on the operation of existing adjacent farm operations in either the General Rural or Agricultural Resource designations.

The lot will not impact on land designated Bedrock Resource Area, and will respect the separation distances from land designated Sand and Gravel Resource Area.

The house and private services are located in an area that will minimize the removal of mature vegetation.

25Mr. Hotte considered water frontage on the Ottawa River to be superior to other water front lots in the area such as the Mississippi River or Carp River. He stated that in valuing the subject property he gave slightly more weight to the water frontage than to the acreage of the subject property. He also said he had not assessed the subject property on the possibility of its being developed with a plan of subdivision.

26Mr. Hotte’s report also included an equity analysis in which he considered thirty sales of residential sales. When he compared their assessments and sales prices the assessment to sales ratio (“ASR”) was 0.97. He considered the ASR close enough to 1.0 that he could conclude that similar properties in the vicinity had been assessed at their current values and were equitable within the meaning of s. 44(3)(b) of the Act.

Appellant’s Evidence

Robert Archambault

27Robert Archambault is the spouse of the registered owner of the subject property, Rachelle Campeau and testified about the history of the property and its physical characteristics.

28Mr. Archambault explained that his wife’s father, the developer Robert Campeau, and one of Mr. Campeau’s former wives had once owned the subject property. Mr. Campeau and his wife had also once owned adjacent property to the north of the subject property. There was an extensive history of litigation among the members of the Campeau family, including a former wife of Mr. Campeau, and Rachelle Campeau had obtained judgment against her father. In 2007 the subject property was transferred to her in lieu of cash payment of the judgment as part of a court approved settlement. The court fixed the amount for the transfer of land at $1,800,000, but the value had to do with the satisfaction of a loan to Mr. Campeau that was part of the litigation. It was not from a free market transaction between unconnected parties and involved compromise of a variety of issues unrelated to the value of the real estate.

29Mr. Archambault referred to the listing of the property in 2013 that Mr. Hotte had mentioned in his report. He said that no offers had been made as a result of the listing. The asking price had been set on the mistaken belief that it would have been relatively easy to obtain approvals for an estate lot subdivision of the subject property. The only party who had expressed interest was a land developer who quickly discovered that there were so many difficulties both physical and legal that it abandoned discussions. The City, through its Official Plan and Zoning By-law had placed a moratorium on plans of subdivision in this part of the municipality.

Garth Allen

30Mr. Lucas called Garth Allen, a paralegal with Property Tax Review Services, Mr. Lucas’ firm and the Appellant’s representative. Mr. Allen did not file an Acknowledgment of Expert’s Duty form or curriculum vitae. He claimed to have five years of working on valuations with Mr. Lucas, although he had no training as an appraiser or valuator from any recognized body such as the Institute of Municipal Assessors or the Appraisal Institute of Canada. He said he had completed in-house training with Mr. Lucas. The Board did not qualify Mr. Allen as being qualified to give opinion evidence about the valuation of property but permitted him to provide fact-based evidence of his search of MLS listings and other sources such as GeoWarehouse showing sales of properties. The Board indicated that his evidence would be considered, if relevant, but only the facts provided and not his subjective opinions would be given weight.

31Mr. Allen identified three vacant land properties; two with water frontage that he felt were comparable to the subject property. These were Lot 19 Mohr’s Drive, 3824-3842 Dunrobin Road, and 2225 Shanna Road.

32Lot 19 Mohr’s Drive is an irregularly shaped property of 81 acres near the village of Fitzroy Harbour. It has approximately 900 feet of water frontage on the Mississippi River, a tributary of the Ottawa River. Part of the property is zoned Agricultural and part is zoned Mineral Resource. A residence could be built in the Agricultural zone, with some restrictions. It sold for $300,000 on August 19, 2013.

333824-3842 Dunrobin Road is a parcel of approximately 100 acres. A portion of it touches Constance Creek, which flows into the Ottawa River. Portions are cleared and some of the property is treed. It is zoned partly in the Environmental Protection Zone and partly in the Rural Countryside Zone, which would permit a residence to be built. It sold for $290,000 on May 14, 2010.

342225 Shanna Road is a sixty-acre parcel that backs onto Provincial Highway 417. It has road access from Shanna Road and does not have water frontage. It is in the Rural Countryside Zone and a residence could be built. It sold for $230,000 on March 28, 2014.

35Mr. Allen and Mr. Lucas used the data from these properties to determine a value for the subject property. First they determined that the median time adjusted sale price of the three properties was $3,347.72 per acre. They then multiplied the acreage of the subject by that price per acre to determine that the value of the subject property was $467,241.28 or $467,000 rounded. Although time adjusted sales were used in this calculation no explanation was given as to how the time adjustments were determined. Mr. Allen also calculated the ASRs for the three properties he had selected, the median of the three being an ASR of 0.785, and calculated that to achieve equity as contemplated in s. 44(3)(b) of the Act that the assessment of the subject property should be reduced to $366,000.

36In cross-examination by MPAC, Mr. Allen was unable to explain how time adjustments were carried out in making his determination of value. Nor was he clear on how a portion severed from 3824-3842 Dunrobin Road was factored into his calculations. He also confirmed that none of the properties he selected had water frontage on the Ottawa River and that 2225 Shanna Road had no water frontage. He admitted that his determination of an ASR was based only on the three properties that he had selected as comparables unlike MPAC’s equity analysis that had used thirty sales to find an ASR of 0.97.

Submissions by MPAC

37Ms. Kelleher, making submissions for MPAC, asked the Board to consider comments made by Member Wyger in Fairbanks v. Municipal Property Assessment Corp., Region No. 09 [2008] O.A.R.B.D. No. 306, (DM 68210 released on May 30, 2008). In deciding a motion to review a decision of the Board he granted a re-hearing where the Board had erred by using an ASR from a single property to determine that MPAC was over-assessing properties in the vicinity. Member Joe Wyger reasoned as follows:

The Board should not have restricted its ASR analysis only to the single property that it found to be similar. The ASR measures how well the MPAC valuation model is reflecting sales values for all homes in particular vicinity.

To discern a trend in relation between sale values and assessed values, and make a supportable finding on the accuracy of the model requires that an average and/or median ASR be derived from many properties.

38Ms. Kelleher also referred the Board to a decision of the Court of Appeal, Devald v. Ontario (Regional Assessment Commissioner 16), 1977 CanLII 1246 (ON CA), [1977] O.J. No. 2166; 15 O.R. (2d) 212. She argued for the purpose of determining that lands are similar within the meaning of the Act that properties need only to have the same general nature, character or function. They do not become dissimilar for the purpose of the Act because they may differ in appearance or in uses to which they are put.

39Ms. Kelleher said the Appellant’s selected comparables were not similar to the subject property primarily because the subject property had water frontage on the Ottawa River whereas the Appellant’s comparables had some water frontage on minor waterways or no water frontage. She also said that the attempt by the Appellant to develop an ASR from the three comparables selected was inadequate. She pointed to the equity analysis provided by MPAC as being more reliable and in accordance with the requirements of the Act. She said the comparables provided by MPAC and the analysis by Mr. Hotte supported an assessment of $1,852,000 and that no further adjustment was required to achieve equity.

Submissions by the Appellant

40Mr. Lucas agreed with MPAC that it was difficult to find good comparables to value a large waterfront property such as the subject property. However, he noted that the assessed value that MPAC had placed on the subject property, $1,876,000 worked out to be $13,441 per acre and that such a value was too high for what was essentially one building lot.

41He said that the MPAC assessed value was four times the values that the Appellant’s comparables were. He urged the Board to find a current value of $467,000 for the subject property.

Analysis by the Board

42Mr. Archambault’s evidence provided some background on the subject property. It is clear from his evidence that the transfer of the property in 2007 for $1,800,000 was a transaction that does not fits the statutory definition of current value in the Act. The Act states that 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.” This means that the property has been exposed to the market and is not one where connected parties involved in litigation arrive at a settlement or have one imposed by the court. So this transaction is plainly irrelevant to what the Board must do in this appeal.

43Mr. Archambault also explained what occurred when the property was listed for $2,350,000 in 2013. The reason that no offers resulted from this listing was that it had been premised on the possibility of registering a plan of subdivision, a scheme that was a non-starter because of the municipality’s moratorium on such developments in the vicinity.

44Both the Appellant and MPAC acknowledged that it had been difficult to find good comparable sales of large waterfront properties that were very similar to the subject property. MPAC used sales of three properties that had frontage on the Ottawa River but with much smaller parcels and much less road and water frontages than the subject. The Appellants used sales of rural properties that were larger than those used by MPAC although none had water frontage on the Ottawa River. One had no water frontage at all and the other two had water frontage on minor watercourses. The Board rejects these as being useful comparables to value the subject property.

45The Board prefers the comparable selection made by MPAC, but only because they represented sales of buildable lots on the Ottawa River. The Board finds that it is not an easy exercise to transfer the land values of MPAC’s comparables with small acreages to the large subject property, although it accepts that the value of the subject property is higher than the comparables. The subject property is attractive because of its size, water frontage, views, and tree cover. But what makes it attractive also presents some limitations on its value.

46For example, the subject property is 139.57 acres and has a frontage of 1,700 feet. It is rectangular. That means that the other dimension is 3,576 feet. So, if one were to construct a residence close to the water frontage it would be necessary to construct and maintain a long lane on the property to access the residence. If the property was to be severed into two parcels, which seems to be permitted by the municipal regulations, then either there would be a need to construct two long lanes or there would have to be an arrangement to share the costs and maintenance of a shared lane. While there was no evidence of what costs might be involved in such a lane it seems logical that it would be significantly more that that required to develop a smaller parcel.

47Although the subject parcel is large, it is essentially one building lot or possibly two under present municipal regulations. If one accepts that the subject property is superior to the three comparables used by MPAC, and if it is possible under present municipal regulations to sever the subject property into two buildable parcels with water frontage, then it would be reasonable to arrive at a current value that is at least equal to the value of the two parcels that are buildable lots on the Ottawa River. MPAC’s highest value parcel was 3210 Barlow Crescent, which had a time adjusted sale price of $606,131. Thus a value of $1,212,262 could be supported, rounded to $1,200,000.

Conclusion

48The Board finds that the correct current value of the subject property for the taxation years based on a January 1, 2012 valuation day is $1,200,000. The taxation years under appeal are 2013, 2014, and 2015.

49The Board accepts the equity analysis provided by MPAC and thus there is no need to adjust the assessment further to be equitable with the assessment of similar properties in the vicinity.

2016 DEEMED APPEAL

50An appeal for the 2015 taxation year is presently before the Board. Section 40.(26) of the Assessment Act provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2015 appeal before March 31, 2016. For that reason, this decision also applies to the 2016 taxation year.

51Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

(26) For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,

(a) in relation to the assessments under sections 32, 33 and 34 for the year; and

(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.