Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 04, 2017

FILE NO.: WR 140693

Assessed Person(s): David Montgomery

Appellant(s): David Montgomery

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

Respondent(s): Township of Dysart Et Al

Property Location(s): 1119 Fisherman’s Trail

Municipality(ies): Township of Dysart Et Al

Roll Number(s): 4624-041-000-67100-0000

Appeal Number(s): 3116448, 3114573, 3116449, 3116450, 3116451

Taxation Year(s): 2013, 2014, 2015

Hearing Event No.: 622029

Legislative Authority: Sections 32, 33 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: April 05, 2016 in Haliburton, Ontario

APPEARANCES:

Parties	Representative
David Montgomery	Self-represented
MPAC	Matthew Sauder and Rebecca Bolton
Township of Dysart Et Al	No one appeared

DECISION OF THE BOARD DELIVERED BY WARREN MORRIS

INTRODUCTION

1These appeals relate to the assessed value of a recreational property on Redstone Lake north of Haliburton which contained a cottage that was demolished in September of 2011. Since then, the owner has commenced rebuilding the cottage which has not yet been completed. Between 2012 and 2015, MPAC and the property owner had a number of discussions about the progress of construction and “allowances” for the unfinished portions of the building. Based on the discussions, MPAC determined that for the 2013 taxation year, the building was 40% unfinished, and for 2014 and 2015 taxation years it was 25% unfinished. The parties agreed on the value and unfinished allowances for the 2013 taxation year however they were not able to agree for the 2014 and 2015 taxation years. MPAC determined the value, as if complete, to be $539,000. The property owner believes this is too high.

2At the hearing, MPAC presented four sales of purportedly comparable properties. Of the four sales, MPAC found all four to be inferior to the subject property, all having similar lots sizes to the subject property, but having older and/or smaller structures. The four comparable sales had sale prices ranging from $332,500 to $490,000. MPAC felt that the best comparable sale was 2155 Boice Bradley Drive (Property 4). Property 4 was the sale with the newest structure, and sold in July of 2012 for $490,000.

3At the hearing, Mr. Montgomery, the owner/appellant, relied on two of his three comparable properties, neither of which had sold near the valuation date of January 1, 2012. One property was described as considerably superior to the subject property yet was assessed at $540,000. The other property was described as having an inferior building but an offsetting superior lot, amounting to being overall similar to the subject property yet assessed at $275,000. In regard to MPAC’s comparable sales, Mr. Montgomery agreed that Property 4 was the most similar to the subject property, however contrary to MPAC, he felt that this property is superior to the subject property. Mr. Montgomery believes that a reasonable value for the subject property would be $420,000.

ISSUE

4The issues are to determine the current value of the property, as if complete, and to ensure that the current value is equitable relative to the assessed values of similar properties in the vicinity. The Board must also determine the proportion of the building that is complete for each taxation year and reduce the current value by providing appropriate allowances for the unbuilt part of the building.

DECISION

5The Board finds that the current value assessment of the subject property is $539,000.

6Further, 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”).

7The Board also finds that for the 2014 and 2015 taxation years, an allowance of 25% be applied to reduce the building portion of the assessment to account for the unbuilt portion of the structure at the property.

8Based on the Request for Reconsideration Minutes of Settlement for the 2013 taxation year (filed as Exhibit 2), the 2013 appeal has been withdrawn.

9Accordingly, the assessment of the subject property for the 2014 and 2015 taxation years is $539,000.

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(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. 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.

13Sections 32.(1) and (1.1) of the Act state:

Correction of errors, etc., in assessment roll

32. (1) 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 roll may correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly.

Same, factual error only

(1.1) Despite the delivery of any notice provided for under this Act, for 2009 and subsequent taxation years, the assessment corporation may, 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:

14Sections 33.(1) and 33.(1)1 of the Act state:

Change re land omitted from tax roll

33. (1) The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted:

34. The assessment corporation shall make any assessment necessary to correct the omission.

15Section 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

16The 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, 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.

17The parties have provided the Board with seven suggested comparable properties – four properties provided by MPAC and three properties provided by the appellant. The four comparable property sales submitted by MPAC are described in Table 1 below (Exhibit 1 with details in Exhibit 4) as follows:

Table 1

Address	Sale Date	Sale Price	CVA	Building (sf.)	Lot (sf.)	Frontage (ft.)	Age / Quality	Comments
Subject Property	1119 Fisherman’s Trail		$539,000	1,600	34,240	100	2012 / 6.0
Property 1	1314 Baybreeze Lane	November 2012	$332,500	$358,000	1,370	39,900	105	1953 / 5.5
Property 2	1302 Baybreeze Lane	September 2011	$419,000	$448,000	1,032	36,100	95	1972 / 5.5
Property 3	1161 Fisherman’s Trail	May 2011	$365,000	$286,000	790	37,050	95	1988 / 5.5
Property 4	2155 Boice Bradley Drive	July 2012	$490,000	$479,000	1,232	29,925	95	2003 / 6.0

18The three properties submitted by the appellant (Exhibit 13) are summarized as follows in Table 2 below:

Table 2

Address	Sale Date	Sale Price	CVA	Building (sf.)	Lot (sf.)	Frontage (ft.)	Age	Comments
Subject Property	1119 Fisherman’s Trail		$539,000	1,600	34,240	100	2012
Property 5	Fisherman’s Trail	No sale	$420,000	1,624	38,950	95	2013	1,041 sf. of finished basement
Property 6	1039 Seagull	No sale	$275,000	1,138	137,120	160	1974	No central heat
Property 7	1010 Rattlesnake	No sale	$540,000	1,539	37,050	95	2000	Full finished basement

19Generally, the Board prefers sales of properties that occur within six months on either side of the valuation day. When such evidence is either limited or not available the Board has accepted sales of properties up to 18 months on either side of the valuation day, or in exceptional circumstances greater time periods.

20None of the properties presented by the appellant have had a market sale within a reasonable time from the valuation day. Given that market sales are a more dependable indicator of current value than Current Value Assessment (“CVA”), the Board rejects the three properties put forth by the appellant. Of MPAC’s four sales, the Board gives the most weight to Property 4 as it requires the least amount of adjustment to the various property elements (building size, lot size, lot frontage and age/condition) when compared to the subject property. Since Property 4 is objectively inferior to the subject property in each of four major property elements (building size, lot size, lot frontage and age/condition), the Board is satisfied that the current value of the subject property must be more than the sale price of Property 4. For this reason, the Board finds the current value of $539,000 to be reasonable.

21Mr. Montgomery went to great lengths to provide evidence that virtually all of the comparable properties, including Property 4, had lots that were of superior quality to the subject property. He provided pictures of the subject property and the comparable properties showing the topography of the lots. He claimed that the subject property’s lot has a slope with limited open green space and a rocky shore line that was not suitable for swimming, whereas the other properties had vastly more open green space. Mr. Montgomery presented various hand drawn diagrams on graph paper (Exhibit 10A) showing his calculations of level green space on the various comparable properties as well as the subject property. While the Board understands Mr. Montgomery’s suggestion that level green space may be more desirable to some prospective purchasers, he provided no evidence of how much, if any, value is added to a property by having additional level green space. The Board is not in a position to make adjustments to property values based on qualitative differences unless there is cogent quantitative evidence (i.e. the sale of two similar properties but for differences in level green space) to support the value difference. Level green space is one of many features that may affect the value a property. Thus the Board gives only little, if any, weight to the green space differences.

22Mr. Montgomery provided Exhibit 5 – an article titled “MPAC in credibility crisis”, dated March 28, 2006. He also provided Exhibit 6 – Ombudsman Report, by Andre Morin, dated March 2006 to support his view that there are problems with the mass appraisal system employed by MPAC and that MPAC as an entity is not credible. Under the Act, there is no mention of MPAC’s mass appraisal methodology, and therefore the Board does not concern itself with MPAC’s model for generating assessments for millions of properties throughout the province. Rather, the Board directs its attention to “current value” as defined in s. 1 of the Act above. In regards to the Ombudsman Report, the Board received and entered it as Exhibit 5 however the Report has been given little weight due to the following factors: Firstly, the report is approximately 10 years old. Further, the report makes no reference to anything related specifically to the subject property and its current value assessment.

“ALLOWANCE” FOR UNFINISHED BUILDING

23At the hearing, MPAC presented evidence in Exhibit 1 that can be summarized as follows:

• On July 30, 2012, the cottage owner advised MPAC that the cottage was 60% complete and that completion was expected in October 2012.
• On a September 15, 2014 MPAC site visit, the building was still incomplete.
• On May 4, 2015, MPAC and the appellant went over each building element and allocated allowances for unfinished portions and agreed upon the same resulting in an allowance of 25% for the 2014 and 2015 taxation years respectively.

24MPAC further stated that the current value of $539,000 could be broken down to $316,000 for the structure and $223,000 for the land.

25The appellant did not provide any quantitative evidence to contradict the MPAC evidence. As such the Board accepts MPAC’s allowance of 25% to be applied as reductions of the building portion of value as presented by MPAC as $316,000 for the structure and $223,000 for the land.

EQUITY

26The 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.

27Mr. Montgomery stated that he believes Property 7, assessed at $540,000 is vastly superior to the subject property since it is located closer to a main road. He also stated that Property 6 is significantly under assessed. Mr. Montgomery did not supply any further evidence to indicate how much these properties were under assessed.

28Mr. Montgomery believes that Property 5 was the most similar to the subject property and feels that the subject property should have the same CVA of $420,000.

29MPAC supplied the CVAs for Properties 1 to 4 (see Table 1 above) showing that 2 of the properties sold for more than their CVAs whereas the other two sold for less than their CVAs. By comparing the four sales to their CVAs, the assessment to sale ratios (“ASR”) of Properties 1 to 4 are 1.08, 1.07, 0.78 and 0.98, with a median of 1.02 and a mean of 0.98. This indicates that there is some evidence that similar properties in the vicinity are assessed at or near their market value.

30Although the Board accepts the appellant’s evidence that there very well may be similar properties in the vicinity that are assessed at less than their current value, the Board is not satisfied that there is a general under assessment of similar properties in the vicinity such that there is inequity to the appellant as envisioned by the legislation. A single similar property’s lower CVA is not sufficient to warrant an adjustment to other properties in the vicinity.

31The Board finds that there is no evidence before it leading to the conclusion that the current value of the subject property requires an adjustment in accordance with s. 44.(3)(b) of the Act.

32Accordingly, the assessment of the subject property for the 2014 and 2015 taxation years is $539,000.

CONCLUSION

33The current value assessment of the subject property for the taxation years 2014 and 2015 is $539,000, under the assumption that construction has been completed. Further, there will be a 25% reduction for the taxation years 2014 and 2015 to allow for the unfinished portion of the structure, resulting in a total CVA 2014 and 2015 of $460,000.

34For the 2014 taxation year, the CVA of $460,000 is made of $223,000 for the base (s. 40) value plus $237,000 for the s. 33 omitted assessment. For the 2015 taxation year a correction under s. 32 to $460,000 is confirmed (made up of $223,000 for land, plus $237,000 building value ($316,000 x 0.75)).

35Based on the Request for Reconsideration Minutes of Settlement for the 2013 taxation year (filed as Exhibit 2), the 2013 appeal has been withdrawn.