Easterbrook v. Municipal Property Assessment Corporation, 2016 CanLII 90729

Assessment Review Board

ISSUE DATE: December 20, 2016

FILE NO.: WR 144292

Assessed Person(s): Cy Bruce Easterbrook

Appellant(s): Bruce Easterbrook

Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 02

Respondent(s): Township of Athens

Property Location(s): 102 8th Line Road

Municipality(ies): Township of Athens

Roll Number(s): 0819-819-024-07105-0000

Appeal Number(s): 2996472, 3002885, 3070373 and 3143706

Taxation Year(s): 2013, 2014, 2015 and 2016

Hearing Event No. 637364

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

Heard: November 24, 2016 in Spencerville, Ontario

APPEARANCES:

Parties	Representative
Bruce Easterbrook	Self-represented
MPAC	Walter Fleming
Township of Athens	No one appeared

DECISION OF THE BOARD DELIVERED BY DONALD WHITEHURST

INTRODUCTION

1The subject property ("SP") is a single-family log house situated on a partially swampy 5.44 acre lot. The residence was built in 2003 but is still incomplete. The SP's assessment was returned at $177,000 for the 2013 taxation year, $174,000 for the 2014 taxation year and $184,000 for the 2015 and 2016 taxation years.

2Walter Fleming appeared on behalf of MPAC and he stated that the 2013 taxation year returned assessment had been set at $177,000 using the sales approach to value. However, during the Request for Reconsideration process, another assessor reduced the 2014 taxation year returned assessment to $174,000. Bruce Easterbrook (the "Appellant") appealed the assessment and another assessor determined that the SP was under assessed. The 2015 and 2016 taxation years returned assessments were subsequently set at $184,000.

3Mr. Fleming testified that he was assigned to handle the appeal. He visited the property in preparation for the hearing and concluded that the SP's current value would be approximately $214,000 but for the fact a $30,000 adjustment was required because the residence was only 85% complete. Mr. Fleming submitted that the $184,000 returned assessment for the 2015 and 2016 taxation years was reasonable when compared to the sales comparables entered in evidence and therefore correct. He did not recommend that the prior year (2013 and 2014) returned assessments be increased.

4The Appellant appeared on his own behalf and submitted a number of exhibits (Exhibits 2 - 9) in support of his request to reduce the returned assessments to approximately $143,000. Amongst other things, he pleaded that MPAC's completion percentage was incorrect; claiming that it should be 75%. He also stated that the per square foot time adjusted sale price of comparable properties entered in evidence by both MPAC and himself supported his request.

PRELIMINARY MATTER

5Mr. Fleming, on behalf of MPAC, objected to the introduction into evidence of two exhibits (Exhibits 6 and 7) by the Appellant stating that it was unfair as the Appellant did not provide a copy of the documents to MPAC as per Rule 45 (2)(a) of the Assessment Review Board's (the "Board") Rules of Practice and Procedure ("Rules"). Furthermore, one exhibit was incomplete and the other the author was not present at the hearing.

6Section 45(2)(a) of the Board's Rules states:

In the Direct Hearing Stream, unless the Board orders otherwise, if a party intends to present documentary evidence at a hearing, at least 21 days before the hearing, the party must provide one copy of each document to each party.

If documentary evidence is not exchanged at least 21 days before the hearing, the Board may refuse to accept the documents at the hearing.

7The Board reviewed the documentation in question and allowed it to be introduced (after giving MPAC ample time to review the materials) because the Board did not find that MPAC would be unduly prejudiced. These documents are either MPAC's documents (Exhibit 6) or email correspondence exchanged between the Appellant and MPAC (Exhibit 7).

ISSUE

8The Board has to determine the SP's current value for the 2013, 2014, 2015 and 2016 taxation years and ensure that it is equitable with the assessments of similar lands in the vicinity.

DECISION

9The Board finds that the SP's current value is $184,000 for the 2013, 2014, 2015 and 2016 taxation years and that amount is equitable with the assessment of similar lands in the vicinity. Consequently, the SP's returned assessments are confirmed at $177,000 for the 2013 taxation year, $174,000 for the 2014 taxation year and $184,000 for the 2015 and 2016 taxation years.

REASONS FOR DECISION

The Legislation

10Section 1 of the Assessment Act ("Act") defines current value as follows:

"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.

11Section 19.(1) of the Act states:

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

12Section 19.2(1) 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. 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.

13Section 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 Position

14Mr. Fleming supported his submission by comparing the characteristics of six sales (Exhibit 1) to that of the SP. He considered two properties to be superior to the SP, two relatively comparable to the SP and two inferior to the SP.

15Mr. Fleming submitted that his current value assessment ("CVA") of $214,000, which is reduced to $184,000 to account for the incomplete construction of the residence, is reasonable when compared to the comparables time adjusted sale price ("TASP").

Appellant's Position

16Mr. Easterbrook submitted that the SP's CVA should be lowered to approximately $143,000. He stated that:

• He appealed the SP's returned assessment for the 2009 and 2010 taxation years. A hearing (Hearing No. 251258) was held on August 24, 2010 before Member Laflamme whereby the parties disputed the percentage completion for the subject property. MPAC submitted that the residence was 75% complete; the Appellant, Mr. Easterbrook, pleaded that is was 66% complete.

• Member Laflamme issued an oral decision whereby he found the SP's CVA was $177,000 but lowered it by $45,000. The resulting CVA in the amount of $132,000 represents 74.6% of $177,000. Mr. Easterbrook stated that it is obvious Member Laflamme preferred MPAC's completion estimate (75%) to that of the Appellant.

• Member Laflamme, in his oral decision, also stated that MPAC's quality rating of 7 for the SP should be changed to a 6.

• Since the 2010 hearing, the Appellant did not make any changes or improvements to the SP that would change the SP's percentage completion. Consequently, Member Laflamme's decision concerning the completion percentage (74.6%) should be preferred to that of MPAC's current estimate of 85%.

• MPAC records show that the SP's lot is 5.44 acres of which 51% to 75% is swamp lands. He estimates that the swamp accounts for 69% of the lot but since the swamp runs through the middle of the SP, he cannot access the back of the SP. Consequently, he estimates the SP has a effective area of 1.88 acres. The Board accepts Mr. Easterbrook's un-contradicted testimony regarding the SP's effective lot size.

• MPAC's database is poorly maintained. Mr. Easterbrook provided examples by stating that he had visited one of MPAC's sales comparables (Sale E) and noted that the finished basement was larger than what MPAC had recorded. He also stated that he measured his own floor area and noted that it measured 1,408 square feet, not 1,413 square feet that MPAC recorded. The Board does not accept Mr. Easterbrook's floor area measurement because it is not sure if Mr. Easterbrook's measurement method is the same method MPAC used for the comparables. Consequently, comparing the SP to the comparables using Mr. Easterbrook's measurement would not be possible.

• In Exhibit 2, the Appellant demonstrated that the SP's CVA should be lowered to about $143,000. He did this by dividing MPAC's comparables' TASPs by the their total square footage. The quotient is then multiplied by the SP's total square footage (1,408). That result is again multiplied by the completion percentage of 74.6. The Exhibit 1 sales comparables range of values using this process is $140,587 - $209,548. Mr. Easterbrook stated that he used MPAC's time adjustment factors because "it was the only data available".

• Mr. Easterbrook employed the same method to calculate the TAS range for his own eights sales comparables (Exhibit 3). The range of values for those properties was determined to be $87,187 - $149,047. (It should be noted that none of the Exhibit 3 sales were time adjusted using MPAC's TAS factors. They were time adjusted, but the time adjustment factors were partially based on certain assumptions made by the Appellant).

• MPAC's Sale B was a questionable comparable because it was located far from the SP as compared to the other comparables.

Board's Analysis - Acceptable Sales Comparables

17The best evidence of current value is the sale of the SP on or near the valuation day. When no such sale occurs, the Board looks to the recent sale of similar vicinity properties to determine current value.

18The Board, in the absence of time adjustment factors, normally rejects sales evidence that occurred more than one year before or after the valuation date. The Board may accept and consider a dated sale(s) that is not time adjusted but will only do so when it finds the sale(s) is the best available evidence. This is not the case here because there is sufficient reliable Time Adjusted Sales ("TAS") in evidence to allow it to make a reasonably finding regarding the SP's current value. Consequently, all the Appellant's sales comparables submitted in evidence (Exhibit 3) are rejected because they are, a) dated more than one year from the valuation date and, b) the time adjustment factors used by the Appellant to time adjust the comparables are not as reliable as MPAC's time adjustment factors. This is because the Appellant, unlike MPAC, made certain assumptions that were not based on sales evidence.

19The Board agrees with the Appellant that MPAC's Sale B (Exhibit 1) should be excluded from the Board's analysis because, when compared to the other comparables, it is located too far from the SP.

Board's Analysis - Adjustment for Incomplete Construction

20The parties agree that the construction of the residence is not fully complete but disagree on what adjustment is required. Mr. Fleming inspected the SP in 2016 and estimated that the residence was 85% complete. Mr. Easterbrook stated that the SP is only 75% complete. Mr. Easterbrook based his submission on two things: 1) Member Laflamme, in his 2014 decision, reduced the CVA by 74.6%, and 2) his un-contradicted testimony (which the Board accepts) that no work was done on the SP after the 2014 hearing. He therefore concludes that the SP is 75% complete and the adjustment should be based on that amount.

21Mr. Fleming countered by proposing that the $45,000 adjustment for the 2009 - 2010 taxation years may have been based on Member Laflamme's finding that MPAC's quality 7 rating for the SP should be changed to a 6. This suggests that Mr. Fleming's 85% complete estimate is possible notwithstanding Mr. Easterbrook's statement that no additional work was done on the SP because three fifths (3/5 or 15%) of Member Laflamme's incomplete adjustment decision could be attributed to unfinished construction and, two fifths (2/5 or 10%) could be attributed to a changed quality rating. However, if the Board finds that Mr. Fleming's suggestion is not plausible, then the Board must reject Mr. Fleming's 85% complete estimate because the Board would have no reason to change Member Laflamme's $45,000 adjustment finding.

22The Board finds that the best method to make a CVA determination for the taxation years under appeal is to make the determination and then reduce it by applying Member Laflamme's lump sum $45,000 incomplete residential construction adjustment. The Board's decision is based on the following facts gleamed from the parties' testimony and documentary evidence.

• On August 24, 2010, Member Laflamme presided over the SP's assessment appeal for the 2009 and 2010 taxation years.

• Member Laflamme, in an oral decision, found the SP's current value to be $177,000 but adjusted it $132,000. Mr. Easterbrook who attended the hearing, stated that he does not recall if Member Laflamme specifically said he reduced the CVA by 75% to account for the incomplete construction. However, Mr. Easterbrook assumed Member Laflamme did use MPAC's suggested 75% as the actual reduction percentage of 74.6 is close to 75%.

• Mr. Easterbrook stated that Member Laflamme made the $45,000 adjustment after determining the SP's CVA in the amount of $177,000. The Board believes that the $45,000 represents the cost (labour and materials) required to complete the construction of the residence as of January 1, 2008; the valuation date for the 2009 and 2010 taxation years. As stated in paragraph 21 above, Mr. Fleming's suggested that Member Laflamme may have made his current value finding without taking into account the SP's Quality rating change from 7 to 6. Consequently, Member Laflamme's adjustment may have been partially based on the change quality rating. The Board rejects that scenario because the Board in residential matters usually makes a current value finding based on the comparison of the SP's characteristics (including the quality rating) with that of recent sales of similar properties in the vicinity. Adjustments to the assessment are usually made after the Board makes a current value determination, but only when there is something about the SP that cannot be compared to the sales comparables, such as incomplete construction or environmental issues. Since it is MPAC's practice to provide the quality rating estimate for all the comparables as was done in this case (Exhibits 1 and 3), the Board thinks it highly unlikely that this practice was not followed in the 2014 hearing. Therefore, the Board finds that, on the balance of probabilities, Member Laflamme made his initial current value finding of $177,000 after considering the SP's quality rating and suggested changes. It follows from that, that the $45,000 adjustment must be solely attributed to the incomplete construction of the residence.

• Applying a percentage (75%) to the 2012 CVA to determine the adjustment for the SP's incomplete residential construction will not be as accurate as using a lump sum ($45,000). The lump sum is solely attributed to the incomplete construction of the residence as of January 1, 2008, whereas, a percentage of the CVA is based on the value of the residence and the value of the land. This is so because when the Board makes its CVA finding for the taxation years under appeal as shown below, it does so by comparing the SP's characteristics (including lot size) to that of the sales comparables in evidence. The resulting CVA finding will include the value of the land and residence.

• There is no evidence before the Board, such as government inflation statistics, that would enable the Board to accurately adjust values ($45,000) from one valuation date (January 1, 2008) to the valuation date for the taxation years under appeal in this case (January 1, 2012).

Board's Analysis - Current Value

23The Board examined all the acceptable TAS submitted in evidence and compared all their characteristics with that of the SP. The Board is of the view that different characteristics have varying degrees of impact on current value and all the characteristics should be considered in determining current value. It does not agree with the Appellant's submission that using one characteristic (total living area square footage) is the best way to make a current value determination for the SP. Table 1 below lists several characteristics that the Board considers important in determining current value in this case. The characteristics are listed in descending order of influence on current value. The Board believes that total above ground living area has the greatest influence on the current value and secondary structures have the least influence.

24The Board, by carefully comparing all the sales characteristics to those of the SP, is able to make a finding whether the sales are Inferior, Relatively Comparable ("RC") or Superior to the SP. The Board's findings are shown in the last line of Table 1 below. The SP's current value range is illustrated in Figure 1 below and the SP's current value is the mid-point of that range.

Table 1

Property	TAS Price	Total Square Feet	Year Built	Effective Lot Size	Basement/ Finished	Secondary Structures/ Other	Superior, RC or Inferior to the SP
SP	N/A	1,413	2003	1.88	1,413/0	None	N/A
Sale A	$237,014	1,770	1996	2.50	0	Garage/Pool	Superior
Sale C	$199,291	1,270	1989	1.10	1,220/0	Garage	Inferior
Sale D	$214,595	1,338	1992	1.03	1,272/0	Garage	Inferior
Sale E	$256,380	1,505	1994	1.07	1,348/364	Garage	Superior
Sale F	$220,273	1,104	1987/2005 Renovation	1.06	1,104/830	None	Inferior

Figure 1

Sales Inferior to the SP: C, D & F ← $199,291 $220,273 →

SP's Current Value Range

Sales Superior to the SP: A & E ← $237,014 $256,380 →

25The Board disagrees with Mr. Fleming's opinion (Exhibit 1) that Sale D is RC to the SP. The Board, as indicated above, finds that Sale D is inferior to the SP. Also shown above, is the SP's current value range which is located between the highest TAS price of the Inferior comparables and lowest TAS price of the Superior comparables. Consequently, the Board finds that the best evidence of current value, before applying the incomplete adjustment, is located at the mid-point of the current value range which is $228,643 rounded to $229,000. The Board, for the reasons listed in paragraph 22 above, applies the same adjustment for incomplete construction ($45,000) that Member Laflamme awarded in 2010. The result is the adjusted current value of $184,000 for the 2013, 2014, 2015 and 2016 taxation years.

Board's Analysis - Equity

26The parties did not plead any inequity. Board nevertheless reviewed the evidence and did not find any evidence that the SP's current value in the amount of $184,000 is inequitable with the assessment of similar lands in the vicinity.

CONCLUSION

27The Board finds that the SP's current value is $184,000 for all taxation years under appeal but will not increase the CVA for the 2013 and 2014 taxation years because MPAC did not request an increase as per the Board's Rules of Practice and Procedure. The Board also finds that the SP's current value is equitable with the assessment of similar lands in the vicinity. The Board therefore confirms the SP's 2013 and 2014 returned assessment at $177,000 and $174,000. The 2015 and 2016 returned assessments are also confirmed at $184,000.