Gordon v. Municipal Property Assessment Corporation, 2017 CanLII 54407

Assessment Review Board

Issue Date: August 17, 2017 File No.: WR 148044

Assessed Person(s): Jeremy Cameron Gordon and Cheryl-Lynn Gordon Appellant(s): Jeremy Cameron Gordon and Cheryl-Lynn Gordon Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region No. 30 Respondent(s): Township of Central Manitoulin

Property Location(s): 4 Margaret Street Municipality(ies): Township of Central Manitoulin Roll Number(s): 5104-020-001-60200-0000 Appeal Number(s): 3135527, 3137189 and 3160413 Taxation Year(s): 2014, 2015 and 2016 Hearing Event No.: 685764

Legislative Authority: Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: July 25, 2017 by telephone conference call

Appearances

Parties	Representative
Jeremy Cameron Gordon and Cheryl-Lynn Gordon	Brad Allison
MPAC	Britney Kee
Township of Central Manitoulin	No one appeared

Decision of the Board Delivered by Anthony LaRegina

1The subject property is a single-family detached dwelling built in 2014. The subject property is located in the town of Mindemoya in the Township of Central Manitoulin on Manitoulin Island. It has a lot with 150 feet ("ft.") of frontage, 150 ft. of depth, and an effective site area of 22,500 square feet ("sq. ft."). The dwelling structure has a total building area of 5,861 sq. ft. There is also an attached garage with 1,071 sq. ft. of building area. The subject property has no basement.

2The subject property was returned on the assessment roll for the 2014 taxation year with a land value of $16,600. A supplementary assessment of $890,400 was added to compensate for the building of a new single family dwelling. The total land and building Current Value Assessment ("CVA") was $907,000. The Appellant submitted a request for reconsideration and an offer was made to reduce the value to $604,000 based on the fact that MPAC believed the subject property was overbuilt in relation to the market area. This offer was made in the 2015 taxation year and rejected by the owner. Therefore the CVA remained at $890,400 for the 2014 taxation year representing the s. 34 appeal and $907,000 for the s. 40 appeal for 2015 taxation year but was revised by MPAC to $604,000 for the 2016 taxation year.

3Jason Ashley, MPAC's valuations Specialist presented four studies in support of the current value including a sales comparison approach. Mr. Ashley concluded from his analysis that while the subject property is unique, the assessed value per square foot is very reasonable compared to other properties in the vicinity and the relationship between assessment values and sale values of properties are within an acceptable standard. Based on these conclusions MPAC made a downward adjustment from 907,000 to 604,000 to compensate for the fact that the subject is overbuilt for the area, Mr. Ashley requests that the Assessment Review Board ("Board") set the current value of the subject property at 604,000 for the 2014, 2015, 2016 taxation years.

4Brad Allison, counsel for the Appellant took the position that MPAC has not met the onus to prove current value because there are no similar properties to the subject property on Manitoulin Island. Mr. Allison asserts that the sales comparison approach used by MPAC is the wrong approach to establishing the value based on the fact that the most similar property found is half the building area of the subject property. Mr. Allison provided no opinion of value for the subject property and submitted no evidence to support his case.

Issue

5What is the correct current value of the subject property for the 2014, 2015 and 2016 taxation years?

6Is the current value as determined by the Board equitable having reference to the assessments of similar lands in the vicinity?

Decision

7The Board finds the current value of the subject property for the 2014, 2015 and 2016 taxation years to be $604,000.

8The Board also finds that the assessment at current value is equitable with the assessments of similar lands in the vicinity therefore no further reduction is required to achieve equity.

9The Board therefore confirms the CVA at $604,000 for the 2016 taxation year, reduces the CVA from $907,000 to $604,000 for the 2015 taxation year and reduces the CVA for the s. 34 appeal from $890,400 to $587,400 for the 2014 taxation year.

Reasons for Decision

Current Value – Evidence

10In accordance to s. 44.(3)(a) the first mandate of the Board is to determine "the current value of the land". Section 1 of the Assessment Act ("Act") defines current value 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, for the 2014, 2015 and 2016 taxation years, the Board must determine what the subject property would have sold for in an arm's length transaction on the January 1, 2012 valuation day set by the Act.

11Section 19.2(1) of the Act prescribes the valuation days, which provides:

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.

12Section 40.(17) of the Act further places "the burden of proof as to the correctness of current value on MPAC".

MPAC's Case

13Mr. Ashley presented Appendices A to E in support of the returned CVA of the subject property.

14Appendix A lists three properties that have sold with large structure sizes in the Manitoulin vicinity. The three properties listed range in building areas from 2,215 to 3,008 sq. ft., in adjusted sale prices from $167,794 to $267,788 and in assessments from $177,000 to $260,000 making them all inferior to the subject property which has a building area of 5,861 sq. ft. and an assessed value of $604,000. Mr. Ashley submits that these three properties, while not directly comparable to the subject property, provide a median Assessment to Sale Ratio ("ASR") of 0.97 which is very close to 1.0 indicating that MPAC provides accurate assessed values that reflect the market

15Appendix B is a group of large newly built single family dwellings. The concept behind this analysis was to determine how the subject property has been assessed relative to other large newly built homes in the vicinity. The median assessed value per square feet of building area for the comparable properties was determined to be $170.54 and the average $164.98. Mr. Ashley concluded that with the subject property's assessed value per square foot at $97.08 from the reduced assessment of $604,000 recognizes that the subject property is overbuilt.

16Appendix C shows all non-waterfront properties which sold on Manitoulin Island for over $200,000 with the following results:

a) All sales resulted in a median sale value per square foot of $154.14.

b) All sales in the subject property's municipality resulted in a median sale value per square foot of $133.90.

c) Sales with a year built of 2000 or newer resulted in a median sale value per square foot of $184.05.

d) Sales of large structures and modern year built resulted in a median sale value per square foot of $93.

17Appendix D shows a breakdown of the three modern year built properties with large structure building areas from Appendix C. Mr. Ashley did the same analysis with these three properties as he did in Appendix B. He subtracted the value of the secondary structures and added back in the depreciation for each of the three comparable properties so that there is a direct comparison to the subject property that was newly built in 2014. Mr. Ashley showed that the median sale value per square foot was $130.45 and the average was $117.59. Again Mr. Ashley concluded that with the subject property at $97.08 CVA per square foot MPAC has accounted for the subject property being overbuilt.

18Appendix E shows photographs of the subject property that Mr. Ashley submitted demonstrated the size of the structure.

19Britney Kee summarized the case stating that based on all the above indicators the assessed value per square foot of $97.08 is substantially below the adjusted sale values and assessed values per square foot for all comparable properties showing that MPAC has taken into consideration the fact that the subject property was overbuilt. Ms. Kee further submits that MPAC has submitted in evidence an equity study of 30 properties sold in the vicinity showing a median ASR of 0.96 further supporting that MPAC is assessing properties close to their current values. Ms. Kee concludes based on the evidence presented that $604,000 is a very fair CVA for the subject property taking the overbuilt condition of the property into consideration. Ms. Kee requests that the Board confirm the 2016 CVA and adjust the 2014 and 2015 to reflect the CVA of $604,000.

Appellant's Case

20Brad. Allison, representing the Appellant, took the position that the subject property is twice the size of any other property on Manitoulin Island referring to it as a white elephant. Mr. Allison further submitted that the sales comparison approach used by MPAC is not valid, based on the fact that the most comparable property is so much smaller in building area. Mr. Allison claims that the evidence presented by Mr. Ashley does not show a sliding scale of valuations as they relate to differences in comparable property building areas. Based on this premise Mr. Allison submits that MPAC has not met their onus to support the current value of the subject property under s. 40.(17) of the Act.

21Mr. Allison presented no evidence and provided no opinion of value, indicating that he had the same problem as Mr. Ashley in locating similar properties for comparison purposes in the Manitoulin Island vicinity.

Analysis - Current Value

22The best evidence of current value is the sale of the subject property on or near the valuation date of January 1, 2012. When no such sale occurs, as in this appeal, the Board looks to the recent sale of other similar properties in the vicinity to determine current value.

23In light of the fact that there were no similar properties on Manitoulin Island Mr. Ashley attempted to estimate a reasonable current value for the subject property. In Appendix A he determined that the median ASR was 0.97 showing a strong relationship between the assessment and adjusted sale value of those properties. Also in Appendix A he determined that the median assessed value per square foot of the three properties was $166.04, which was substantially higher than the subject property's assessed value per square foot at $97.08.

24He then went on to analyze all properties that sold over 200,000 in Appendix C and determined that the median adjusted sale values of all those properties was anywhere from $133.90 to 184.05, again substantially higher than the assessed value of subject property at $97.08.

25Finally, in Appendix D Mr. Ashley analyzed three properties that were new and large area built and got a median adjusted sale value per square feet of $130.45 with a range on the low side of $91.07 and on the high side at $130.89. The lower end of the range is 1667A Monument Road with a building area of 2,992 sq. ft. and at the upper end of the range is 3 Noble Street with a building area of 2,392 sq. ft. This is very much in support of Mr. Allison's observation that there is a sliding scale or economies of scale demonstrating that as a property increases in building area the adjusted sale value per square foot goes down. The Board also supports this theory however, there is a lack of sales comparable to the subject property in order to definitively establish the relationship. The Board therefore concludes that the square foot analysis is not a valid approach to establishing current value when comparing properties that do not have similar building areas and/or characteristics. Therefore the Board will reject all analyses using building areas in support of current value of the subject property.

26Mr. Ashley also provided two studies to demonstrate the relationship between assessments and adjusted sale values of properties in the vicinity of the subject property. In Appendix A, Mr. Ashley demonstrated that three properties had a median ASR of 0.97 and in the equity study the ASR analysis of 30 sales yielded a median assessment to adjusted sale ratio of 0.96.

27The Board rejects Mr. Allison's argument that the subject property is a white elephant. In fact it is a unique property that the owner built for his needs and enjoyment. The subject property is virtually brand new and has never been listed for sale on the open market. There is no evidence to show that the subject property is a white elephant.

28Contrary to Mr. Allison's assertion, the Board is satisfied that MPAC has met the onus to demonstrate the correctness of the current value of the subject property, because MPAC has provided evidence to support it. Within the hearing, the burden then shifts to the Appellant to provide some evidence that the current value assessment is wrong. Mr. Allison provided no evidence to suggest that some other value was more correct than the one proposed by the corporation whose job is to value properties. Mr. Ashley established that the subject property was a unique property and using MPAC's expertise adjusted the CVA from $907,000 to $604,000. Based on the results of the ASR studies presented by Mr. Ashley showing a close relationship between Assessments and Adjusted Sale Values of 0.97 and 0.96 and relying on Mr. Ashley's testimony that $604,000 is the correct current value, the Board finds that MPAC has met the burden of proof. The current value of the subject property is $604,000.

Equity Analysis

29Section 44.(3)(b) mandates and directs that after determining current value, the Board shall 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".

30The ASR is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the time-adjusted sale prices.

31Mr. Ashley presented an equity analysis of 30 residential sales within 5.72 kilometers of the subject property. These properties sold in the time frame between January 2009 and December 2012 yielding a median ASR of 0.96. He submits that MPAC standards indicate that for residential property, the median ASR should fall between 0.95 and 1.05, which is in line with the International Association of Assessing Officers ("IAAO") standards, which state that the median ratio should fall between 0.90 and 1.10. If the median ratio falls within this range, this reveals that the current value assessments are reflective of sales prices in the vicinity. Mr. Ashley concluded that similar properties in the vicinity have been assessed at their current values and consequently there is no need for an equity adjustment.

32The Appellant provided the Board with no evidence in this regard. The only equity evidence before the Board is from MPAC. The ASR evidence does not lead the Board to the conclusion that the assessment of the property should be reduced below its current value to make it equitable with the assessments of similar lands in the vicinity.

Conclusion

33Based on all of the evidence, the Board determines the current value to be $604,000 and finds this value to be fair and equitable. Consequently, the Board confirms the returned current value assessment of the subject property as $604,000 for the 2016 taxation year. The Board also reduces the current value assessment from $907,000 to $604,000 for the 2015 taxation year and for the s. 34 appeal reduces the current value assessment from $890,400 to $587,400.