Simmatis v. Municipal Property Assessment Corporation, 2017 CanLII 39816

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 21, 2017

FILE NO.: WR 147092

Assessed Person(s): Dennis Erik Simmatis and Catherine Marie Smola

Appellant(s): Dennis Erik Simmatis

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 06

Respondent(s): Township of Alnwick/Haldimand

Property Location(s): 86 Rolling Banks Road Unit 36B

Municipality(ies): Township of Alnwick/Haldimand

Roll Number(s): 1450-226-020-18500-0000

Appeal Number(s): 3189963

Taxation Year(s): 2016

Hearing Event No.: 679372

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

Heard: May 30, 2017 by telephone conference call

APPEARANCES:

Parties	Representative
Dennis Erik Simmatis and Catherine Marie Smola	Dennis Erik Simmatis
MPAC	Paula Backus and Terri-Lyn Wright
Township of Alnwick/Haldimand	Kathy Moran

DECISION OF THE BOARD DELIVERED BY SCOTT McANSH

INTRODUCTION

1The property before me is a seasonal home on Rice Lake. Construction on the property began in 2012 and finished sometime in early 2017. The home is a large two storey brick structure with just over 500 feet of waterfront. MPAC assessed the property at $559,000 for the 2016 taxation year.

2At the hearing of this appeal, MPAC recommended that the assessment be reduced to $547,000 based on a recent inspection of the property.

3Dennis Simmatis argued that the assessment is too high for three primary reasons. First, he argued that the house was still under construction on the state and condition date for the 2016 taxation year. Second, he argued that he has no “deeded” road access to the property, making the property less valuable then similar properties with road access. Finally, he argued that MPAC has not properly addressed two easements that run over the property.

DECISION

4For the reasons set out below, I find that the sales evidence supports a current value of $650,000 but that value should be reduced to $520,000 to reflect its unfinished state in December 2015. I also find that the assessment should be further reduced, to $470,000 to reflect the value of two easements that cross the property.

5There is no indication that this value is inequitable when compared to similar assessments in the vicinity. I therefore reduce the assessment from $559,000 to $470,000 for the 2016 taxation year.

Legislation

6The role of easements is important for these appeals and is set out in s. 9(1) of the Assessment Act, RSO 1990, c A.31 (“Act”), which states that land that is “subject to the easement shall be reduced accordingly.”

7Section 36(1) of the Act requires assessments to be made annually and s. 36(2) requires that the assessment roll be returned to the municipality “not later than the second Tuesday following December 1 in the year in which the assessment is made.”

8Section 44.(3)(a) of the Act requires that I “determine the current value of the land.” Current value is defined in s. 1 as “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.” That is, I must determine what the subject property would have sold for in an arm’s length transaction on the relevant valuation day, set pursuant to s. 19.2(1)3 of the Act, as of January 1, 2012 for the 2016 taxation year.

9Once I have determined the current value, s. 44.(3)(b) requires that I “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” but only if that adjustment would result in a reduction of the assessment.

Current Value

10MPAC presented the sales of five properties in support of its recommended current value of $547,000. Mr. Simmatis also presented one sale in support of a lower assessment. All of the properties are waterfront lots in the area. The table below describes the relevant characteristics of those sales:

Address	Waterfront (ft.)	Lot size (acres)	House size (sq. ft.)	Year Built	Sale Date	Sale Price
86 Rolling Banks Road 36B	506.02	3.44	3,644	2012
7300 County Road 18, 2	218.95	0.81	2,495	1980	May 2011	$530,000
6108 Curtis Point Road 12	40.00	0.11	1,453	1994	Dec 2010	$230,000
216 Hampton Crescent	100.00	0.48	1,485	1974	May 2012	$360,000
138 McCracken Road	230.00	0.89	1,200	2004	Sept 2013	$440,000
6 7th Line Road 8	49.5	0.11	1,366	1993	April 2010	$375,000
86 Rolling Banks Road 21B	144.35	0.51	1,321	1974	Sept 2012	$358,600

11As can be seen, all of these properties are older, smaller buildings on significantly smaller lots. These sales indicate that the property at issue here is likely worth significantly more than $530,000. The median value per foot of waterfront is $3,042.12, which would indicate a value of $1,539,373.56. The median value per square foot of building area is $256.94, which would indicate a value of $936,289.36. There are clear economies of scale in both metrics. However, both indicate that the property is likely worth much more than $530,000.

12I have to reliable evidence on which to determine a precise current value. The available evidence only indicates that the current value is higher than $530,000. Without superior properties, I cannot say accurately how much higher. The median value per square foot of building area metric indicates that the value could be as high as $930,000. However, it is unlikely that that metric can accurately determine the value of a house so much larger than those it is being compared to. The sale of 7300 County Road 18, 2 is the closest comparable to Mr. Simmatis’s property, and it has a value be square foot of building area of $212.42, which would indicate a value of $774,058.48. The relationship on size is not likely linear, so the property is likely worth less than $770,000, but more than $530,000.

13The safest conclusion to draw from that evidence is that the current value of the property is between those values. I therefore find that the evidence supports a current value of $650,000.

14From that starting point, I must address the three issues raised by Mr. Simmatis: construction status, road access and easements.

Construction Status

15Property is assessed each year as it was when the tax roll was returned to the municipality. The roll must be returned by the second Tuesday following December 1 of the previous year, so the state of the property on that date is determinative of the assessment. This is known as the state and condition date. For the 2016 taxation year, the state and condition date is December 15, 2015.

16Mr. Simmatis argued that his home was not fully constructed on December 15, 2015, and that the value of the property should reflect that construction status. MPAC did not contest that point. The evidence before me is unclear on the exact status of the site in December 2015, though it was clearly over a year from its ultimate completion.

17I have no evidence before me on how that status ought to be reflected in the current value. I am reluctant to arbitrarily assign a value to the construction status. However, the evidence is clear that some adjustment must be made to reflect the state and condition of the property. Time is a metric that can be used to calculate how complete the project was at the relevant time. The construction took a total of five years to complete, from 2012 to 2017. By December 15, 2015 nearly 80% of that time had passed. A 20% reduction in value is therefore supported by the evidence.

18I therefore remove 20%, or $130,000, from the likely starting point of $650,000 noted above. That results in a likely current value of $520,000.

Road Access

19Mr. Simmatis argued that his property should have a lower assessment because it lacks “deeded” access to a public road. The evidence indicates that the property has some form of access to a public road, but that the road is not cleared in the winter. However, the legal status of that road access is far from clear. Mr. Simmatis says that the property only has legal access by water and is therefore worth less than MPAC suggests.

20As with the state of construction, I have no evidence on the value to apply to public road access. However, unlike the state of construction issue, I do not find that the evidence supports a reduction in value. I accept that there is no registered access to a public road, but that does not mean that there is no road access. Cottages are often accessed by private roads and I have no evidence before me that whether road access is public or private has an impact on value. No reduction is required for road access.

Easements

21Mr. Simmatis outlined two easements that run from the lake, and across the property, to neighbouring sites. He stated that these easements permit lake access for those neighbouring sites. He indicated that each right of way is 15 feet wide and approximately 240 feet long. That is, there are two nearly identical 3,600 square foot easements running over the property that other people can use to access the lake. MPAC removed the land subject to the easements from the legal description of the property as part of their reassessment from $559,000 to $547,000. They argue that now that the land is not assessed, it cannot be considered for easements. I disagree.

22All land in Ontario is to be assessed, so removing the land from the legal description is not how easements are to be addressed. Section 9(1) of the Act governs how easements are to be addressed. The legislation is clear that the value attributable to the easement is to be removed from the assessment of the property negatively impacted by the easement and added to the properties that benefit from the easement.

23The question is how to value the easements. MPAC’s evidence suggests that they see little or no value of the land subject to the easement. Mr. Simmatis argues that the easements should be valued at $68,000, based on a MPAC value per foot of waterfront.

24A right of access is not a full interest in land, and would have some value less than the fee simple value put forward by Mr. Simmatis. It is unclear how much these easements are used by neighbouring sites, or how they impact the enjoyment of the land by the owner. The mere existence of easements does not indicate that they have any significant value. In the circumstances I believe that a value of $15,000 per easement is reasonable. That is a total of $30,000 that should be removed from the property’s assessment and assigned to the properties that benefit from the easements.

Current Value Conclusion

25The sales evidence supports a likely value of $650,000 for the property. That should be reduced to $520,000 to reflect the state of construction in December 2015. The assessment should be reduced $30,000 below current value to account for the two easements running across the property.

Equity

26Once I have determined the current value of the land I must determine if that value is equitable with the assessments of similar properties in the vicinity. The current value is $520,000, because the easement reduction is to the assessment, not the current value.

27MPAC presented the sales and assessments of 30 properties the vicinity of the property. The median assessment to sales ratio is 0.96, which means that on average properties in the area are assessed at 96% of their sales value. This is strong evidence that assessment at current value is fair and equitable in this area. Mr. Simmatis did not present any evidence to contradict that conclusion. Therefore, no adjustment is requirement to make the assessment of the property equitable with that of similar properties in the vicinity.

CONCLUSION

28The evidence before me supports a current value of $520,000 for the 2016 taxation year and I do not find that value to be inequitable when compared to the assessments of similar land in the vicinity. There are two easements running over the land with a value of $15,000 each. The assessment must be reduced to reflect the value of those easements. I therefore reduce the assessment from $559,000 to $490,000 for the 2016 taxation year.