Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 23, 2017

FILE NO.: WR 143094

Assessed Person(s): Judith Anne Truax

Appellant(s): Scott Rose

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 07

Respondent(s): North Kawartha Township

Property Location(s): 91 Butler Drive

Municipality(ies): North Kawartha Township

Roll Number(s): 1536-020-001-52800-0000

Appeal Number(s): 3161424

Taxation Year(s): 2016

Hearing Event No.: 638792

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

Heard: September 23, 2016 in Apsley, Ontario

APPEARANCES:

Parties Representative

Judith Anne Truax Scott Rose

MPAC Ron Donnelly

North Kawartha Township Dolores Wilson

DECISION OF THE BOARD DELIVERED BY WARREN MORRIS

INTRODUCTION

1This 2016 tax year appeal relates to the assessed value of a lakefront property of approximately 0.3 acres on Julian Lake containing a seasonal/recreational dwelling, at the municipal address of 91 Butler Drive, in North Kawartha Township. The dwelling is a single storey self-contained residence of 760 square feet (“sq. ft.”), with a newly built unfinished basement of 760 sq. ft. MPAC determined the effective frontage of the property to be 140 feet with and effective depth of 70 feet.

2The 2013 taxation year was the subject of an appeal before the Assessment Review Board (“Board”). The Board’s decision determined the current value for the valuation date January 1, 2012 to be $187,000, which was applied for taxation years 2013, 2014 and 2015. In 2014, the Appellant applied for and was granted a building permit to “…install poured concrete strip footings and poured concrete foundation walls” to close in a storage area beneath the dwelling that was previously open to the outdoors. For taxation year 2016, MPAC originally returned an assessed value for the subject property at $277,000. However, during the Request for Reconsideration (“RFR”) process, MPAC moderated its’ position to an assessed value of $211,000. The property owner believed the assessment was still too high and appealed MPAC’s decision to the Board.

3At the hearing, MPAC presented four sales of purportedly comparable properties. Of the four sales, MPAC found two to be superior, one to be inferior, and one to be relatively comparable to the subject property. MPAC maintains that the returned value of $277,000 is within the range of values of the comparable sales, and that therefore $211,000 was reasonable.

4The Appellant stated that the only improvement to the property was the addition of a concrete foundation, and believes that properties in the area are generally over assessed.

5At the completion of the hearing, the Appellant requested to have the decision returned in writing, and the Board consequently reserved its decision.

ISSUE

6The issues are to determine the current value of the property, and to ensure that the current value is equitable relative to the assessed values of similar properties in the vicinity.

DECISION

7The Board finds that the current value of the subject property is $211,000.

8Further, the Board finds that there is no evidence before it leading to the conclusion that the current value, as determined above, requires an adjustment in accordance with s. 44.(3)(b) of the Assessment Act (“Act”).

9Accordingly, the assessment of the subject property for the 2016 taxation year is confirmed at $211,000.

REASONS FOR DECISION

The Legislation

10Section 19.(1) of the Act states:

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

11Section 1 of the Act defines “current value” as:

“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.

12Section 19.2 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.

Current Value

14The best indicator of current value is an arm’s length and market tested sale of the subject property on the valuation day, January 1, 2012 or close to it. If, as in this case, no such transaction took place near the valuation date, the next best measure of current value is arm’s length and market tested sales of comparable properties in the same vicinity and market on or close to the valuation day. To enable an estimate of value for the subject property to be derived from a comparable property there must be sufficient elements of similarity, in terms of location and physical factors such as total building area, lot area, water frontage, age/quality of construction and other features such as outbuildings, so as to enable a direct comparison to be made between the comparable property and the subject property.

15The Board reviewed the four property sales presented into evidence by MPAC. The lowest of the comparable sales was Sale B, which when compared with the subject property is objectively inferior. Sale B had a larger lot and was of similar age and size, however its structure was of lower quality, and had no basement or outbuildings. The time adjusted sale price of Sale B was $223,114. Since Sale B is objectively inferior, coupled with the other comparable sales, a current value of $211,000 is reasonable.

16Both parties agreed that the only reason this matter has proceeded to the current hearing was that MPAC became aware of the improvements made to the property by virtue of a building permit application. The Appellant argued that the Board had already determined that the current value of the subject property was $187,000 for the 2013 tax year. Although the Appellant acknowledged that he spent approximately $50,000 and agreed that he had added value to the property, he did not believe that $24,000 ($187,000 to $211,000) in value was added to the property, but rather $6,000 or $7,000. The Appellant did not present any comparable sales but rather relied on the previous decision of the Board that the current value was $187,000.

17Originally, the evidence from the Appellant was that the only improvement to the structure on the property was the addition of a foundation. But upon cross-examination, the Appellant acknowledged that the following improvements were made to the lower area:

• What was previously open storage was now completely closed to the outside elements;

• The ceiling height was increased from 0 to 4 feet, to 8 feet throughout;

• Insulation was added;

• Concrete floor was added.

18It is the Board’s view that these additions are significant, and are reasonably likely to have added substantial value to the subject property. MPAC’s use of the comparable properties merely confirms the reasonableness of the assessment.

Equity

19The Act requires the Board to address the issue of equity by having reference to the assessment of similar lands in the vicinity of the subject property. The Appellant has the burden of proving that the CVA is not equitable relative to similar lands in the vicinity of the subject property.

20Although the Appellant did not present any evidence related to equity, MPAC presented an Equity Analysis submitted as Exhibit 4. The Equity Analysis consisted of the assessment and time adjusted sales of 23 similar properties in the vicinity of the subject property (including the four comparative sales used for current value), all sales which took place in 2009, 2010, 2011 or 2012. When taking the assessments as a percentage of sales value, known as the Assessment Sales Ratio (“ASR”), MPAC determined a median ASR to be 1.04, which indicates that similar properties in the vicinity are generally over assessed by approximately 4%. Consequently, MPAC concluded that an equity adjustment is not warranted.

21The Board considered MPAC’s Equity Analysis. Even if calculated using the 13 sales from 2011 and 2012 only, the evidence is clear that similar properties in the vicinity are generally assessed for more than their current value. For such circumstances, there is no opportunity for an equity adjustment to the current value, as the Act states that an equity adjustment should be made “…if such an adjustment would result in a reduction of the assessment of the land”. Therefore, the Board is satisfied that an equity adjustment is not warranted.

CONCLUSION

22The current value assessment of the subject property for the 2016 taxation year is confirmed at $211,000.