Julius Toth and Gregory Reynolds v. Municipal Property Assessment Corporation and City of Timmins, 2017 CanLII 6542

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

February 07, 2017

FILE NO.:

WR 144992

Assessed Person(s):

Julius Toth and Monica Toth

Appellant(s):

Julius Toth and Gregory Reynolds

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 29

Respondent(s):

City of Timmins

Property Location(s):

1609 Airport Road

Municipality(ies):

City of Timmins

Roll Number(s):

5627-010-121-05600-0000

Appeal Number(s):

3059467, 3093278 and 3160239

Taxation Year(s):

2014, 2015 and 2016

Hearing Event No.:

652672

Legislative Authority:

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

Heard:

December 02, 2016 in Timmins, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

Julius Toth and Gregory Reynolds

Gregory Reynolds

MPAC

Ted Picard and Tyler Allard

City of Timmins

David Campbell

DECISION OF THE BOARD DELIVERED BY ANTHONY LaREGINA

INTRODUCTION

1The subject property is located at 1609 Airport Road in the City of Timmins. The subject property was built in 1976 and consists of a single family detached home located on water with a 3.65 acre lot and a residence with a total building area of 2,601 square feet. The building area has 1,630 square feet on the main floor, 971 square feet of the second floor and 1,016 square feet in the basement. The home also has an attached garage with 443 square feet and separate storage shed with 1,528 square feet built in 1980. The residence is on septic and has a private well. The lot is located on a river with a weedy shoreline and west exposure. Ted Picard conducted an inspection of the subject property on two occasions and concluded that the property required substantial repair and therefore rated the property in fair condition.

2The subject property is assessed at $391,000 for the 2014 taxation year and at $341,000 for both the 2015 and 2016 taxation years and is classified as Residential (RT).

ISSUES

3Mr. Picard, representing MPAC, introduced four comparable properties, three of which are located on Airport Road, the same street as the subject property. The fourth comparable property is located on Kraft Creek Road and sold on two separate dates. Mr. Picard submits that the recommended assessment of $341,000 be further reduced by $2,000 to $339,000 to compensate for a non-functioning fireplace. Mr. Picard further concludes that the recommended assessment of $339,000 falls within the adjusted sale range of the comparable sales and is therefore fair and equitable. Mr. Picard also notes that if the condition of the subject property is improved to the standard of the other comparable properties, the current value would be closer to $400,000.

4Mr. Picard requests that the Assessment Review Board (“Board”) reduce the assessed value of the subject property from $391,000 to $339,000 for the 2014, taxation year and from $341,000 to $339,000 for the 2015 and 2016 taxation years. Mr. Picard further requests that the property should have a commercial component of $84,000 to compensate for a retail shop which Mr. Toth’s wife operated until 2005 and has since been shut down. Mr. Picard requests that the Board apportion the assessed value of $339,000 as follows: $255,000 RT and $84,000 Commercial (“CI”).

5David Campbell, representing the City of Timmins, submits that the median adjusted sale value per square foot of the comparable properties is $195.78 and therefore based on the 2,601 square feet building area of the subject property the current value of the subject property should be $501,000. Mr. Campbell concludes that at $339,000, Mr. Picard has allowed $161,000 for improvements in the property. Mr. Campbell is in agreement with MPAC that the assessment should be further reduced to $339,000.

6Gregory Reynolds, the representative for Mr. Toth argued that based on the condition of the subject property the market value of the property should be no more than $250,000 as the property requires about $150,000 to improve it to a reasonable living standard in line with the comparable sales presented by MPAC. Mr. Reynolds requests that the assessment of the subject property should be reduced from $391,000 which is representative of the value of the property in reasonable condition to $250,000 which is more representative of the value of the property in its current state.

DECISION

7The Board finds that the current value of the subject property as of January 1, 2012 is $301,000.

8Further, the Board finds that no adjustment to the subject property’s current value is required to make it equitable with the assessment of similar lands in the vicinity.

9The Board therefore, reduces the assessment of the subject property from $391,000 to 301,000 for the 2014 taxation year and from $341,000 to 301,000 for the 2015 and 2016 taxation years and confirms the classification as Residential (RT).

REASONS FOR DECISION

Determination of Current Value

10The initial task for the Board is to determine the current value of the subject property as required by s. 44.(3)(a) of the Assessment Act, R.S.O. 1990, c. A.31, as amended (“Act”), which in part states that “…the Board shall…determine the current value of the land.”

11Section 19.(1) of the Act states that “…the assessment of land shall be based on its current value…” and s. 1 of the Act defines current value as “…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 40.(17) of the Act stipulates that “…the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.”

13The issue for the Board’s determination is the current value of the subject property as of January 1, 2012.

MPAC’s Evidence

14Mr. Picard has provided the Board with the sales of four comparable properties as the basis for establishing the current value of the subject property. The details on these properties are found on Appendix A of Exhibit 1. All four properties are located in the vicinity of the subject property three of which are located on the same street. The details of the comparable properties are outlined in the following chart.

Subject

Sale A

Sale B

Sale C

Sale D

Sale E

Address

1609 Airport Rd

1475 Airport Rd

1591 Airport Rd

1155 Kraft Crk

1155 Kraft Crk

761 Airport Rd

Sale Amount $

315,000

250,000

523,000

389,000

420,000

Adjusted Sale $

300,714

280,050

470,000

465,835

378,000

CVA $

391,000

297,000

293,000

464,000

464,000

370,000

Site Area

3.65

0.84

1.65

41.64

41.64

0.60

Condition

Fair

Average

Average

Average

Average

Average

Building Area

2,601

1,065

1,164

2,705

2,705

1,375

Garage

Att. 443 S.F.

Det. 800 S.F.

Det. 1800 S.F.

Att. 480 S.F.

Att. 480 S.F.

Det. 964 S.F.

Third Structure

1,528 S.F.

n/a

646 S.F.

n/a

n/a

n/a

15The four comparable properties proposed by MPAC sold on the open market between August 2008 and September 2013 within the range of $250,000 and $523,000. After time adjusting these values to the January 01, 2012 valuation date, the new range becomes $280,050 on the low side and $470,000 on the high side.

16Mr. Picard stated in both his oral evidence and written submission that the most comparable to the subject property is Sale B 1591 Airport Road located next door to the subject property which has similar condition and similar outbuildings to the subject property. Mr. Picard also added that Sale B sold for an adjusted sale value of $280,000 and when he accounts for the differences in lot size and building area of the subject property, the subject property should be valued at closer to $400,000. Mr. Picard concludes that based on the poor condition of the subject property, a more reasonable CVA of the subject is $341,000.

17During cross-examination, Mr. Picard further admitted that if he owned the property he would completely gut the property including the replacement of floors, walls, kitchen and bathrooms therefore bringing the value of the property to between $450,000 and $500,000.

18When Mr. Picard was presented with the suggestion that the septic system and the fireplace were not functioning properly, Mr. Picard made a further reduction of $2,000 to compensate for the fireplace to a revised value of $339,000.

19During Mr. Picard’s latest inspection he took photographs which are included in Exhibit 1 showing that part of the home as well as the garage and outside structure was used for commercial purposes by Mrs. Toth who ran a small porcelain business. The business closed down in 2005 as a result of Mrs. Toth’s poor health but all the stock and fixtures are still in place. Mr. Picard submits that approximately 25% or $84,000 of the property should be classified as Commercial (CI) and the remaining $255,000 as Residential (RT).

Appellant’s Evidence

20Mr. Toth began by giving the Board a history of the subject property. Mr. and Mrs. Toth built the house together in 1976. Mr. Toth claimed that he was very knowledgeable of the building industry and literally built the home with his own hands without using any outside trades. Mr. Toth testified that Mr. Picard came to inspect the home during the summer of 2016 and indicated that the home was in very poor condition and that it had to be “gutted.”

21Mr. Toth estimated that in order to bring the home to proper living standards the home would require repairs which are estimated at approximately $150,000 to $160,000. Mr. Toth claimed that he called local trades people who verbally presented him with the following estimates of partial work to be done:

a. Replace roof - $19,875

b. Replace windows - $24,000

c. Repair well or water source - $8,400

d. Repair septic system - $30,000

e. Replace flooring - $24,000

22In addition Mr. Toth also claimed that the bathrooms and kitchen would have to be replaced. Mr. Toth got all estimates from local trades as he could not do the work himself any longer due to the fact he is 77 years of age. Mr. Toth presented no written estimates to the Board of the work to be performed.

23Mr. Toth testified that by Mr. Picard reducing the assessment from $391,000 to $339,000 for the condition of the house he is essentially building in $53,000 for repairs which is substantially lower than the $150,000 required.

24With regards to the ceramic business, Mr. Toth testified that his wife started the business in the garage with a few of her friends as a hobby in 1999. She fell ill in 2005 at which point she closed the shop. Since then. Mr. Toth has left the fixtures and stock in the original order.

25Mr. Toth agrees that the property is probably worth $400,000 but requires $150,000 to repair. Mr. Toth requests that the Board reduce the assessment to $250,000 to compensate for the poor condition of the property.

26Mr. Reynolds presented no additional evidence to the Board.

Board’s Findings

27The thrust of the Act is to rely on current value as the basis for assessed value. 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.”

28The best evidence of current value is the sale of the subject property on or close to the valuation day of January 1, 2012 which in this case did not occur.

29Mr. Picard introduced four comparable properties in support of current value. After careful analysis of the comparable properties the Board will reject 1155 Kraft Creek Road as a similar property on the basis that this property has a site area of 41.64 acres as compared to the subject property which is only 3.65 acres. The Board will accept the remaining three comparable sales 1475, 1591 and 761 Airport Road which are all on the same street as the subject property in support of the current value. These three properties have an adjusted sale range of $280,050 on the low side to $378,000.

30The Board will set the current value of the subject property at $300,714 which represents the median adjusted sale value of the three comparable sales which are similar to the subject property. The Board acknowledges that the subject property has a larger lot size and site area as compared to the three comparable sales provided in evidence but the subject property is in substantially poorer condition than the other similar properties in evidence. It is clear from both Mr. Toth’s evidence and Mr. Picard’s admission during cross-examination that the home needs to be gutted requiring substantial investment to bring it to proper standards. Mr. Picard suggested that based on the 2008 returned assessment he made an allowance of $108,000 for repairs and Mr. Toth who built his own home makes the claim that it is closer to $150,000. These values clearly counterbalance the differences in site area and building area between the subject property and the comparable properties submitted by MPAC.

31The Board rejects Mr. Campbell’s submission that the current value of the subject property should be based on the median adjusted sale value per square foot of the comparable sales presented by MPAC. Based on the Board’s analysis this approach is not valid in this circumstance as the building area of the comparable properties is substantially different to that of the subject property producing an invalid adjusted sale value per square foot. The range of adjusted sale values of the comparable sales is a much better indicator of current value for the subject property.

32Based on the best available evidence, the Board will set the current value of the subject property at $301,000 rounded as of the January 1, 2012 valuation date.

33With regards to Mr. Picard’s claim that the property should be partially classified as Commercial (CI) for the ceramic business which has been shut down since 2005, the Board makes the following observations;

a) MPAC has every right to classify a portion of this property as commercial from the standpoint that the portion not being used for residential purposes automatically defaults to commercial. However, MPAC has failed to make this change during years the business was in operation and is now requesting it after the business has been closed for 11 years.

b) Secondly, in order for MPAC to change the classification it would have had to file an appeal of supplementary assessment under s. 34 of the Act. The appeal before the Board is a s. 40 residential appeal filed by the assessed person for the reason that the assessment is too high and is not an appeal on classification.

c) Finally, Rule 30 of the Board’s Rules of Practice and Procedure requires MPAC to serve on the Appellant a special notice to request a change to a class with a higher tax rate 50 days before the hearing and MPAC did not comply with this rule.

34The Board will therefore reject the request to change a portion of the property to Commercial (CI) for all of the above reasons.

Determination of Equity

35Once current value has been established, the Board must determine whether a reduction should be made to lower the assessment below current value in order to make it equitable with the assessments of similar lands in the vicinity.

36Section 44.(3)(b) of the Act states that:

…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 land.

37MPAC introduced an equity study of 30 property sales in the vicinity of the subject property yielding a median assessment to adjusted sale ratio of 0.96 which falls within the reasonable range of 0.95 to 1.05 indicating that assessments and sale value of similar properties are tracking very close to each other and therefore not requiring any further adjustment to the current value.

38Mr. Picard introduced no evidence in support of an equity adjustment and, therefore, the Board will make no further adjustment to the current value as determined above in support of equity.

CONCLUSION

39Based on the best available evidence, the Board will therefore reduce the assessment of the subject property for the 2014 taxation year from $391,000 to $301,000 and from $341,000 to 301,000 for 2015 and 2016 taxation years and confirms the classification as Residential (RT) for all years under appeal.