Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 26, 2017

FILE NO.: WR 147142

Assessed Person(s): Stuart Jenkins

Appellant(s): Erin Jenkins and Stuart Jenkins

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 7

Respondent(s): Township of Algonquin Highlands

Property Location(s): 1287 Big Hawk Lake Road

Municipality(ies): Township of Algonquin Highlands

Roll Number(s): 4621-003-000-76702-0000

Appeal Number(s): 3230385

Taxation Year(s): 2016

Hearing Event No. 679566

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

Heard: May 29, 2017 in Minden, Ontario

APPEARANCES:

Parties	Representative
Erin Jenkins and Stuart Jenkins	Self-represented
MPAC	Mary Hennessey
Township of Algonquin Highlands	No one appeared

DECISION OF THE BOARD DELIVERED BY BERNARD COWAN

INTRODUCTION & ISSUES

11287 Big Hawk Lake Road (the “subject”) is a seasonal waterfront recreational property separated from the Hawk River by the road. Its site has effective frontage of 145 feet and its 841 square foot structure was built in 2007, but was and remains unfinished. The building is not heated and its only plumbing is a sink and a toilet. The walls are frame only, lacking drywall, and the building lacks kitchen cabinetry, trim and basement finishing. The property is nevertheless occupied seasonally by Erin and Stuart Jenkins¹, the appellants, but only short-term due to the inability to even shower.

2MPAC has assessed the property at $209,000 for the 2016 taxation year. During the disclosure period, it became clear to its representative, Ms. Mary Hennessey, that the property was unfinished to a greater extent than the 14% unfinished allowance incorporated by MPAC into the subject’s assessed value as returned. Examples include the aforesaid one-half bathroom, not the full one as assessed; lack of any heating rather than forced-air heating as assessed; and unfinished floors, unfinished unpainted walls and absence of trim. Adjusting the assessed value to correct the aforesaid discrepancies and modifying the extent of incompletion as was indicated by the appellants, Ms. Hennessey proposes that the assessment be reduced to $139,000. Based on the four property sales in her Exhibit 1’s comparative Property Report as validated by their assessment to sales ratios (“ASRs”) that range from 0.95 to 1.08, she supports this recommended reduced value as being appropriate and equitable.

3The appellants seek a reduction in the assessment to about $80,000-$100,000, based on their characterization of the building as “…very much unfinished, basically a shell”, and on a realtor’s Market Estimate as of August 22, 2016 that the property might be listed at $95,000 and attract a net sale price of about $80,000 after commission.

4I must determine a reasonable current value (“CV”), which is akin in this instance to market value, as of January 2012, being the valuation date for 2016 taxation. I am then obligated to refer to other similar properties’ assessments to ensure that the CV for the subject is equitable.

DECISION

5The assessment is reduced from $209,000 to $139,000 for the 2016 taxation year. No additional downward adjustment is necessary to achieve equity with the assessment of similar lands in the vicinity.

Current Value

6Section 19(1) of the Assessment Act (“Act”) states:

The assessment of land shall be based on its current value.

7The Act establishes January 1, 2012 as the valuation date for 2013 to 2016 taxation, and defines current value to mean:

…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.

8The Act establishes that ordinarily, for each taxation year, the state and condition of a property in early December of the preceding year is to be determinative of the property’s CV for a taxation year. In this instance the subject, as it was in its unfinished condition in December 2015, is to be valued based on what it might reasonably have sold for as of January 2012.

9I attribute no weight to the local realtor’s letter of opinion² of value being between $80,000 and $90,000, for two reasons. Firstly, the sales and listings provided to the appellants in support of the estimated value (Exhibit 2) were in 2016, a date too far removed from January 2012 to be determinative without explanation and/or clarification. Secondly, the realtor was not present to be subjected to cross-examination by Ms. Hennessey or to questioning by me. It appeared from the sales data that none of the properties were “waterfront” like the subject, being separated from the river (or from a lake) by a road. I was unable to ascertain the implication of this circumstance in quantifiable terms, if any, by questioning the realtor. Nor could I obtain information from the realtor as to the differences in the marketplace between 2012 and 2016 or as to her experience in valuing uncompleted structures.

10The only other sales transactions in evidence that incorporate comparative features such as lot and building sizes, age, quality classes, etc. are the four sales introduced by Ms. Hennessey in her Exhibit 1 Property Report.

11I exclude the Property 1 sale from my comparative analysis because I concur with Ms. Hennessey that it is a substantially superior property to the subject and to the three other sold properties. Its sale price and CV are more than double those of any of those three properties.

12In order to establish a basis for comparison of the subject to the three sold properties which are presumed to have be in a completed state, I consider it reasonable to gross-up the subject’s assessment as returned from $209,000 to $243,000.

13Dividing the subject’s $209,000 assessment as returned by its MPAC-determined 86% percentage complete (100% less 14% incomplete allowance) indicates the $243,000 value at which MPAC would have assessed the property for 2016 taxation, if it were in a completed condition.

14The range of the three property sales is from $155,000 to $255,000. Differences among these properties’ individual characteristics make direct comparison of each of these to the subject difficult and subjective. Nevertheless, the subject’s notional $243,000 value as if finished falls within this range, thereby indicating on the balance of probability that the value “as complete” is reasonable.

15My challenge is to appropriately establish a CV for the property in its incomplete state as of early December 2015, in January 2012 values.

16As indicated above, Ms. Hennessey has re-evaluated the initial assessment to correct factual differences and to modify the “unfinished” adjustment. This has led to her recommendation to reduce the assessment to $139,000.

17Relying on Ms. Hennessy’s experience in assessment matters, and having been subjected to cross-examination and my questioning, I accept her recommendation as being reasonable and appropriate, on the balance of probability. Her conclusion is compatible with the appellants’ testimony as to the estimated costs to complete the finishing. My questioning of them determined that no quotes had been obtained, as the completion is not likely to occur imminently, and the labour component is intended to be undertaken by the appellants, with assistance by family members. The appellants estimated the completion cost of materials to be in the range of $65,000-$70,000 and to be no more than $100,000 if the walkout basement is completed. While unsupported, this testimony was under oath and appears to be reasonable and forthright. Deducting $65,000 or $100,000 from the $243,000 “as completed” valuation I have determined above indicates an uncompleted value in the range of about $143,000-$178,000. A further deduction of an indeterminate value for the notional labour cost to complete would be appropriate, and has led to my conclusion that the $139,000 CV as recommended by MPAC is reasonable and rational.

EQUITY WITH ASSESSMENTS OF OTHER PROPERTIES

18Section 44(3) of the Act states in part:

…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 land

19The burden of proof as to the equity of the subject’s CV in relation to the assessments of other properties rests with the appellants. They have not introduced any determinative evidence in this regard, and have accordingly not satisfied me that any reduction in the CV to a definitive amount below $139,000 is merited.

20Their only evidence in this regard is with respect to the six sold or listed properties in 2016, as set out in the aforesaid sales listings from the realtor. Five of these documents indicate 2016 assessed values between $99,000 and $115,000. The sixth one has a substantially larger building than the subject and the other five, resulting in its $244,000 assessment.

21I am unable to find that any of these six properties are similar to the subject because they do not appear to have the attribute of being directly across the road from a body of water. Most probably, the absence of this feature has led to these dissimilar properties’ assessments being significantly lower than the subject’s $139,000 CV. No inequity is discernable from these properties’ sales listings.

Ms. Hennessey’s Exhibit 1 evidence includes an Equity Analysis. This document lists 30 time-adjusted residential property sales located less than 6 km from the subject that sold in 2011 or 2012, together with the ASR for each. The median ASR is 0.89, leading to her conclusion that “… similar properties in the vicinity have been assessed lower than their current values. As a result, an equity adjustment may be warranted…”

22In this instance, I find that no additional adjustment is warranted, primarily because Ms. Hennessey’s testimony indicates that the values utilized leading to her recommended reduction in value for the subject to $139,000 incorporate adjustments based on corrected features utilizing valuation factors derived from assessment values. Furthermore, she would on probability have made the “unfinished” percentage adjustments on that same basis.

23Secondarily, I attribute no determinative value to the 0.89 median ASR outcome of the Equity Analysis for two reasons.

24Firstly, the Analysis incorporates properties having about 4 property codes differing from the subject’s Property Code 391, without explanation. Without evidence-based clarity, I am unable to definitively conclude whether or not some of the properties included therein are similar to the subject, which is a seasonal recreational property on water (or across from water). If not on water, they may not be of similar character and/or function to the subject.

25Secondly, and of considerable import, the Analysis addresses equity among individual properties, and essentially demonstrates the sample to be substandard (my terminology) and hence of little or no utility. Specifically, the Analysis:

• establishes its measurement of equity as the the Coefficient of Dispersion (COD), which measures the deviation of individual ASR ratios from the median ASR.

• indicates that a low COD implies that the included properties’ assessments are equitable.

• for the 30 listed ASRs, appears on the balance of probability to include both residential and recreational waterfront properties, as five different property codes are indicated.

• indicates that MPAC’s standards dictate that a COD should not exceed 15 for residential waterfront properties or 20 for recreational waterfront properties.

• indicates the COD for the 30 ASRs listed therein to be 24.6, substantially exceeding MPAC’s upper-limit standard of 15-20.

• thereby casts reasonable doubt on the suitability of my utilizing the indicated median ASR of 0.89 as a basis to further adjust the subject’s CV in quantifiable terms, notwithstanding the implication that by exceeding the COD’s standard of 20, the Analysis demonstrates inequity.

26There is accordingly no determinative evidence before me to indicate, in quantifiable terms, that the CV I have determined for the subject is inequitable with other similar properties’ assessments.

CONCLUSION

27The subject property’s assessment is reduced to $139,000 for the 2016 taxation year, so as to eliminate features incorrectly assessed and to recognize its uncompleted status. No further reduction has been demonstrated by my reference to other properties’ assessments as being necessary to achieve an equitable assessed value.

Footnotes

1. 1With apology to Ms. and Mr. Jenkins, to avoid incorrectly attributing their testimony to the wrong individual, I shall refer to them herein as “the appellants”.
2. 2This was a document disclosed to MPAC and, with Ms. Hennessey’s consent, shown to me on the appellant’s cellular phone. Hard copies of sales listings obtained from this realtor were introduced by the appellants as Exhibit 3.