Charles James Ingles v. Municipal Property Assessment Corporation, 2017 CanLII 39804

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 23, 2017 FILE NO.: WR 146746

Assessed Person(s): Charles James Ingles Appellant(s): Charles Ingles Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 17 Respondent(s): Township of Lake of Bays

Property Location(s): 2 Rock Island Municipality(ies): Township of Lake of Bays Roll Number(s): 4427-010-018-05900-0000 Appeal Number(s): 3133727 and 3155521 Taxation Year(s): 2015 and 2016 Hearing Event No. 673965

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

Heard: April 19, 2017 in, Dwight, Ontario

APPEARANCES:

Parties	Representative
Charles James Ingles	Self-represented
MPAC	Brittany Kee
Township of Lake of Bays	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

INTRODUCTION

12 Rock Island, just over two acres in size, is a small rocky island located in Lake of Bays, Muskoka. It has been in the Appellant’s family for several generations, with little or no change to the original buildings located there, built in 1921 and 1923. This seasonal/recreational dwelling, first tier on water, was returned at a value of $1,063,000 for 2015 and $865,000 for 2016. The Appellant appeals these assessed values as being too high.

2MPAC, represented by Brittany Kee, recommends a reduction of the 2015 assessed value to $865,000. The Appellant has rejected the recommendation, arguing that this property is designated a heritage property by the Township of Lake of Bays. As such, it features the original cabin and shed, built in 1921 and 1923 respectively, and maintained in an unaltered state since then. Because of the simple construction, along with the lack of amenities such as hydro and plumbing, the Appellant submits that the assessed value is excessive.

ISSUES

3What is the correct current value of the subject property?

4After having determined the current value, and having reference to the value at which similar lands in the vicinity are assessed, is an adjustment in the assessment of the subject property required to make it equitable with similar lands in the vicinity?

DECISION

5The Board finds that the current value of the subject property is $865,000 as at the valuation day, January 1, 2012.

6The Board finds that, in the absence of evidence from either party, having reference to the value at which similar lands in the vicinity are assessed, no reduction in the assessment of land is required to make it equitable with the assessments of similar lands in the vicinity.

7Accordingly, the assessment is reduced from $1,063,000 to $865,000 for the 2015 taxation year. The assessment is confirmed in the amount of $865,000 for the 2016 taxation year.

REASONS FOR THE DECISION

8Section 44.(3)(a) of the Assessment Act (“Act”) requires the Board to first “determine the current value of the land.” The definition of “current value” is contained in s. 1 of the Act:

“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.

9Section 19.(1) of the Act states that:

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

10The best measure of current value is an arm’s length and market-tested sale of the subject property on or close to the valuation day of January 1, 2012. If no such transaction took place, a further measure of current value is derived from the arm’s length and market-tested sales of comparable properties in the same vicinity and market. This measure acts as a benchmark and gauge of the correctness of the assessed value of the subject property.

11To enable an estimate of value for the subject property to be derived from an analysis of comparable property sales, there must be sufficient elements of similarity in terms of physical factors. In seasonal/recreational properties on water, factors that contribute to value include not only the structure and quality of primary and secondary buildings, but also topography, the amount of frontage, and the island’s proximity to the mainland. Seasonal/recreational properties are very seldom directly comparable because no two properties are alike. Therefore, particular attention must be paid to the comprehensive description of each comparable property.

12MPAC’s evidence was given by Jason Vink, Property Valuation Specialist. He provided the Board with Exhibit 1, the property valuation report, which contained details of the six comparable sales used in MPAC’s analysis. Of these, five are located on Lake of Bays and one on Mary Lake. Four of the five Lake of Bays sales were located on the mainland. The only two single-owner island property sales presented by MPAC were substantially different from the subject property, and one of these was on a different, much smaller lake. The six sales took place between September, 2010, and August, 2012.

13The residences on Sales A, C, D, E and F were more newly built or renovated, giving them effective years built ranging between 1967 (Sale D) and 1990 (Sale F) as compared to the subject property’s effective year built of 1923. Sale B lacks a dwelling or any structures. Photos of the five comparable structures show cottages of various designs, all featuring modern windows, doors and roofs. Photos of the subject property provided by both MPAC and the Appellant show a much smaller structure lacking modern windows and roofing. In addition, the five comparable dwellings are all larger than the subject property’s area of 735 square feet (“sq. ft.”). Their total building areas range in size from 789 sq. ft. (Sale A) to 2,335 sq. ft. (Sale F). Sales A, C, D, and E have dwellings rated by MPAC as Quality 5 construction; Sales F has a dwelling that is quality rated at 6.5. The subject property has a quality rating of 3.

14Despite the essential differences in the dwellings, MPAC concluded that the six comparable properties provided a range of values that supported the assessment of the subject at $865,000. The six comparables ranged in value from a low of $335,594 for Sale B, a property without a structure located on the mainland, to a high of $1,396,054, the time-adjusted price paid in September, 2011 for Zephyr Island. It is a single-owner island on the same lake as the subject property. For this reason, MPAC determined that it was the most comparable property to the subject, although there are several buildings on site, including a 1,988 sq. ft. boathouse and three small cabins of 120 sq. ft. each. The last property, Sale F – 200 Snowshoe Island – is located on Mary Lake, a smaller lake than Lake of Bays. It sold for $882,398 (time-adjusted price) in October, 2010.

15As Mr. Vink explained, island properties have larger frontage than properties on the mainland, and 360 degree views. For this reason, and despite accessibility issues related to water access only, single owner islands are valued more highly in the marketplace. Lake of Bays has few sales of single-owner islands for comparison, which is why MPAC included four mainland properties and one sale from a smaller lake. Mr. Vink testified that Sale E, Zephyr Island, was the most comparable property due to its location rather than its buildings and amenities. He confirmed that the subject property’s value lay in its being a single-owner island property, and that the structures on the island contributed only $16,000 to the total assessed value.

16Mr. Vink also referred to portions of Exhibit 1 which confirmed the municipality’s By-law No. 2014-118, designating 2 Rock Island “as a property of cultural heritage value and interest under Part IV of the Ontario Heritage Act”. Schedule A to the By-law sets out the heritage values contained in the 2 Rock Island property, which include pine construction, low pitch hip roof, the stone foundation and field stone chimney, open pine framing, and original pine floors, doors, and casement windows.

17MPAC’s property valuation materials also contained a copy of the Corporation of the Township of Lake of Bays By-Law No. 07-165 titled: “Being a By-law to Establish a Heritage Property Tax Relief Program for the Township of Lake of Bays”. Section 2.3 of the By-law states that eligible heritage properties will receive an annual refund of 40% of the taxes for the given year.

18The Appellant provided the Board with Exhibits 3 and 4. Exhibit 3 is a package of seven photographs of the subject property and two photographs of another Lake of Bays island property known as Richards Island. Exhibit 4 is a list prepared by the Appellant setting out the assessed values of the subject property from 2005 through 2017.

19The Appellant’s chief argument against the assessment was the fact that his property had none of the usual amenities associated with cottages in the Lake of Bays area. In order to preserve the heritage significance of this property, the Appellant has made no changes to the structures on the site. This means that the family members using the cottage cook with a wood cookstove and a propane-fuelled hotplate. They use kerosene lanterns for light. There is no indoor plumbing, requiring the use of an outhouse. Water for cooking and washing is drawn from the lake. The Appellant pointed out that all MPAC’s comparable properties with dwellings featured modern cottages with amenities. All had indoor plumbing and electrical service at the very least.

20In his testimony, the Appellant referred to Richards Island, a property that he said sold for $1,900,000 in 2005. It was after this sale that values started to climb in respect of seasonal/recreational property in Lake of Bays. He testified that the subject property increased in assessed value by 400% in twelve years.

21The Appellant did not provide any other comparable sales. He did not indicate what the appropriate current value of the subject property was in his opinion, or how he may have arrived at that amount.

22At the close of the hearing, MPAC tendered two Board decisions in support of its argument that the Heritage Designation did not, of itself, have a quantifiable negative impact on the current value of the subject property. In Marchesseau v. Municipal Property Assessment Corp., Region No. 18, [2009] O.A.R.B.D. No. 91, the Board dealt with an appeal related to a building in Niagara-on-the-Lake which was operated as a bed and breakfast, and which had received a heritage designation. The owners sought to have a 10% reduction in value based on the designation. The Board found that the designation was not a covenant in the Deed to the property, and also found that the Appellant had failed to provide evidence relating to the impact, if any, of the heritage designation on the current value of the home.

23Lemos v. Municipal Property Assessement Corp., Region No. 07 [2011] O.A.R.B.D. No. 108 involved the impact of the Heritage Designation on a Toronto property used both for commercial and residential purposes. No evidence was submitted which would serve to quantify the impact of the heritage designation. There, as here, the Board is powerless to reduce the current value of the property without an evidentiary basis for calculating the impact.

24In examining the evidence in total, the Board finds that MPAC provided six seasonal/recreational property sales in reasonable geographical proximity to the subject property within 12 months of the valuation date. While none of the properties is very similar to the subject, these six sales provide a range of values, with smaller mainland properties having sold for less than MPAC’s valuation of the subject property and two single-owner island properties with newer buildings and amenities having sold for more. When taken together, the six sales show that MPAC’s assessment of the subject property is reasonable and supportable.

25The Appellant argued that having a Heritage Designation on the lands would lead to a reduction in current value because it would reduce the amount a willing buyer would pay for the lands. The Appellant offered no evidence to support this statement. The contents of the By-laws set out that the tax incentive would expire upon a transfer of the property, but could be applied for by a new owner. The designation ran with the land, but could be removed by a purchaser upon application and subsequent approval by Council. In the absence of evidence allowing the Board to quantify the impact of the Heritage Designation on the value of the land, the Board finds that MPAC has discharged its burden of proof by demonstrating that the recommended assessment is reasonable.

EQUITY

26As required by s. 44(3)(b) of the Act, the Board is required to consider evidence of whether or not the assessment is equitable with the assessed values of residential properties in the vicinity. For this test, the properties do not have to be identical to the subject property but may include other types of residential dwellings which are not seasonal/residential and are not necessarily located on water.

27In the present case, MPAC offered no evidence on this issue and the Appellant referred to one other property, Richards Island, but provided the Board with no factual information about the Richards Island assessment. In addition, because the Richards Island sale took place many years prior to the valuation date, this evidence would not have been helpful. Therefore, in the absence of evidence, the Board finds that no adjustment is required to make the assessment equitable with similar properties in the vicinity.

CONCLUSION

28The Board finds that the value of the subject property is $865,000 as of the valuation day, January 1, 2012.

29Having reference to the values at which similar lands in the vicinity are assessed, the Board does not find it necessary to adjust the current value to make it equitable with the values of similar lands in the vicinity.

30The Board, therefore, reduces the assessment of the subject property from $1,063,000 as returned to $865,000 for the 2015 taxation year. The Board confirms the assessment in the amount of $865,000 for the 2016 taxation year.