Renaud v. Municipal Property Assessment Corporation, 2018 CanLII 102248

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 23, 2018 FILE NO.: WR 156142 Assessed Person(s): Steve Renaud, Carole Gilbert Appellant(s): Steve Renaud Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 31 Respondent(s): Township of Hornepayne Property Location(s): 131 First Avenue Municipality(ies): Township of Hornepayne Roll Number(s): 5796-000-004-07300-0000 Appeal Number(s): 3273730 and 3314728 Taxation Year(s): 2017 and 2018 Hearing Event No.: 702879 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended Heard: September 28, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Steve Renaud	Self-represented
MPAC	Tim Wishman
Township of Hornepayne	Melissa Chenier

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

1Steve Renaud (the “Appellant”) is the owner of a one-storey single family detached residential property located at 131 First Avenue (the “Subject Property”) in Hornepayne Township (“Hornepayne”). It is a raised bungalow with 1,266 square feet (“sq. ft.”) of total building area and a basement garage. It was built in 1993, underwent some renovations, and has an effective year of build of 2000. MPAC has assigned it a quality of construction rating of 6.0. It is located on a 6.43 acre lot. There are two outbuildings including a detached garage.

2MPAC returned the assessment for the Subject Property for $238,000 for the 2017 taxation year and for $205,000 for the 2018 taxation year.

3Mr. Renaud has appealed the assessment for the 2017 and 2018 taxation years to the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act (“Act”) R.S.O. 1990 c. A. 31. He takes the position that the assessment as returned for the Subject Property is too high. He estimates the Subject Property’s current value at $160,000 to $175,000.

4Pursuant to the Act, the burden of proof as to the correctness of the current value of the Subject Property rests with MPAC. For the period of 2017-2020, the Subject Property is valued as of January 1, 2016. MPAC’s representative, Tim Wishman estimates the current value of the Subject Property as of January 1, 2016 to be $205,000, based on an inspection and the direct comparison approach.

5Mr. Wishman conducted an equity study and determined that an equity adjustment is not warranted. He concludes that the assessment should be reduced from $238,000 to $205,000 for the 2017 taxation year and confirmed at $205,000 for the 2018 taxation year.

6Mr. Renaud asserts that the Subject Property is inequitably assessed in relation to similar properties and should be assessed at a maximum of $160,000.

ISSUES

7The issues to be determined on this appeal are:

a) What is the correct current value of the Subject Property as of the January 1, 2016 valuation date; and

b) Whether there should be an equitable reduction of the current value as determined by the Board and, if so, what should the amount of this reduction be.

DECISION

8The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $205,000. Furthermore, the Board finds that the evidence before it does support the conclusion that an equitable adjustment is required under s. 44.(3)(b) of the Act. The current value must be reduced from $205,000 to $194,000 in order to make the assessment equitable with similar property in the vicinity.

9The assessment of the Subject Property located at 131 First Avenue is reduced from $238,000 to $194,000 for the 2017 taxation year and from $205,000 to $194,000 for the 2018 taxation year.

RELEVANT LEGISLATION

10Section 1 of the Act states:

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.

11Section 19(1) of the Act states:

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

12Section 19.2(1) of the Act states:

19.2 (1) Valuation Days - 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 the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

13Section 40(17) of the Act states:

40.(17) Burden of Proof - For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

14Section 44(3) of the Act states:

44(3) Same, 2009 and subsequent years. – For 2009 and subsequent taxation years, 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 the land.

Analysis and Findings

What is the correct current value of the Subject Property as of the January 1, 2016 valuation date?

MPAC’S Evidence and Submissions

15Mr. Wishman states that the owners purchased the Subject Property in November 2011 and there have been some updates including a porch that has been changed to a dining room accessible from the kitchen. Also, a new detached garage was built in 2015.

16Mr. Wishman states that he inspected the Subject Property on April 18, 2018. As a result of his inspection, the total building area changed from 1,266 sq. ft. to 1,333 sq. ft. He adds that for purposes of these appeals, he refers to 1,266 sq. ft. of total building area. Also, the two storey barn structure is now assessed as two structures, as a shed and as a type III uninsulated barn. He adds that for purposes of these appeals, he refers to the barn as one structure with an assessed value of $4,210. The new double garage has an assessed value of $48,630.

17Mr. Wishman states that the Subject Property is one of the higher end homes in Hornepayne with a much larger lot than most and possessing multiple secondary structures. Since the owners purchased the property in 2011, some updates have been done. A large 1,700 sq. ft. detached garage was built in 2015. It is finished inside. He adds that the previous assessment that added the new garage was reduced from $197,000 to $187,000 as part of the request for reconsideration process.

18He states that he did not time adjust the sale of the Subject Property that occurred in November 2011.

19Mr. Wishman relies on a “Valuation Report” of the Subject Property. Key property details for the six proposed comparable properties located in Hornepayne are set out below in Table A. Mr. Wishman notes that none of the properties have comparable lot sizes to the Subject Property. All sales have been time adjusted to the January 1, 2016 valuation date.

Table A

Property	Year Built (Effective Year)	Quality	Building Area (sq. ft.)	Site Area (ac.)	Other	Sale (Time Adjusted Sale “TAS”)
131 First Street (Subject Property)	1993 (2000)	6.0	1,333	6.43	-Finished basement area (670 sq. ft.) -Basement garage -Barn -Shed -Detached garage (2015)(1,700 sq. ft.)	N/A
20 Seventh Avenue (Sale 1)	1990	6.5	1,044	0.26	-Raised bungalow with split level entry -Finished basement area (552 sq. ft.) -Basement garage	130,000 (135,483) (08/2015)
20 Cedar Ridge (Sale 2)	2002	6.0	1,140	0.24	- Raised bungalow with split level entry -Finished basement area (962 sq. ft.) -Shed	155,000 (155,555) (08/2015)
112 Riverside Drive (Sale 3)	1981	6.0	1,494	0.19	-Raised bungalow -Finished basement area (405 sq. ft.) -Detached garage (2003)(785 sq. ft.)	139,000 (143,791) (07/2013)
40 Third Street (Sale 4)	1987	6.0	864	0.11	-Raised bungalow -Finished basement area (748 sq. ft.)	110,000 (110,394) (08/2015)
205 First Street (Sale 5)	2004	6.0	1,604	0.35	-Finished basement area (168 sq. ft.) -Shed -Detached garage (2004)(864 sq. ft.)	185,000 (191,377) (07/2013)
9 Ecomadina Avenue (Sale 6)	1979 (1985)	6.0	1,175	0.25	-Finished basement area (568 sq. ft.) -Detached garage (1979)(864 sq. ft.)	120,000 (123,983) (08/2013)

20Mr. Wishman states that he considers Sales 4 and 6 to be inferior to the Subject Property in terms of age and building size. Also Sale 4 has no detached garage.

21Mr. Wishman considers Sales 1, 2, 3 and 5 as similar to the Subject Property. Of, these, he considers Sales 1 and 2 to have dwellings most similar in style and design as raised bungalows with a split level. Sale 1 also has a basement garage like the Subject Property.

22His opinion of the Subject Property’s current value is $205,000 based on 1,266 sq. ft. of total building area.

Appellant’s Evidence and Submissions

23Mr. Renaud asserts that they overpaid when they purchased the Subject Property in 2012 for $175,000.

24He asserts that the assessment as returned for the Subject Property is too high. It is the second highest assessed property in Hornepayne. He states that their tax base is one of the highest in Northern Ontario. He emphasized that Hornepayne is a small remote community.

25Mr. Renaud takes the position that MPAC places too much emphasis on lot size adding value. He asserts that acreage has little value in Hornepayne. The Township has 10 plus acre lots for sale for less than $10,000.

26He states that the new structure houses a workshop and tools, a snowmobile, an old pickup truck, a motorcycle and storage space. He asserts that such a structure does not add a high value to the Subject Property as it only appeals to a limited number of people.

27Mr. Renaud states that there are not many comparable properties in Hornepayne as it is a small town and there are few sales.

28Key property details for the proposed comparable properties that he relies on are set out below in Table B.

Table B

Property	Year Built (Effective Year)	Quality	Building Area (sq. ft.)	Site Area (ac.)	Other	Sale (Time Adjusted Sale “TAS”)	2012 Assessment
131 First Street (Subject Property)	1993 (2000)	6.0	1,333	6.43	-Finished basement area (607 sq. ft.) -Basement garage -Type III uninsulated barn -Shed -Detached garage (2015)(1,700 sq. ft.)	N/A	205,000 Garage: 48,630
305 Third Avenue	1987 (1991)	5.5	1,620	8.12	-1 storey -Finished basement area (? sq. ft.) -Detached garage (1960)(660 sq.ft.)	N/A	130,000 Garage: 1,911
205 First Street	2004	6.0	1,604	0.35	-1 storey -Finished basement area (168sq. ft.) -Shed -Detached garage (2004)(864 sq. ft.))	185,000 (191,290) (07/2013)	164,000 Garage; 24,715
35 Queen Street	1980 (1989)	6.0	1,610	0.23	-1 storey -Finished basement area (336 sq. ft.) -Detached garage (2009)(1,427 sq. ft.)	N/A	149,000 Garage: 40,820
123 First Avenue	2000		2,162	1.0	-2 storeys -Detached garage (600)	$180,000 (08/18)	157,000 Garage; 18,948
163 Brown Street	1927	5.5	1,474	31.3	-No assessed value for building that appears in fair condition	N/A	40,000
211 First Street	2001	7.0	1,959	0.35	-2 storeys -Attached garage -Directly behind Subject Property	N/A	165,000
20 Cedar Ridge	2002	6.0	1,140	0.24	- Raised bungalow with split level entry -Finished basement area (962 sq. ft.) -Shed -175 ft. from a lake	155,000 (155,555) (08/2015)	114,000

29He asserts that 305 Third Avenue and 35 Queen Street are good comparable sales. While the property at 35 Queen Street has a regular lot, it also has a large detached garage like the Subject Property.

30He asserts that the Subject Property could have sold for $160,000 to $175,000 on the legislated valuation date. He adds that high property taxes ($8,760 based on an assessed value of $205,000) plus the high cost of utilities brings the cost of home ownership through the roof and lowers the market value in the eyes of a prospective buyer.

Board’s Analysis and Findings

31Under s. 44.(3)(a) of the Act, the Board must first determine “the current value of the land.” The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the Subject Property on the valuation date or close to it.

32In the absence of a sale of the Subject Property, the next best measure of current value is arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.

33To enable an estimate of value for the property to be derived from suggested comparable properties, there must be sufficient elements of similarity, in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc. so as to enable a direct comparison to be made.

34The Board has seven comparable property sales in evidence. Both MPAC and the Appellant have referred to the properties located at 205 First Street and 20 Cedar Ridge. The Board did not consider the sale of 123 First Avenue that took place in August 2018 as no time adjustment factor was available to time adjust the sale to the January 1, 2016 valuation date.

35The Board finds the property located at 20 Seventh Avenue to be similar in design as a raised bungalow with similar finished basement area. It is older but has a slightly higher quality class of 6.5. It has a basement garage whereas the Subject Property has a large detached garage and other outbuildings. It is located on a small lot whereas the Subject Property is located on a much larger site area of 6.43 acres. The Board finds this property to be inferior to the Subject Property.

36The Board finds the property located at 20 Cedar Ridge to be similar in design as a raised bungalow with a larger finished basement area. It is newer and has the same quality class of 6.0. It has no garage whereas the Subject Property has a large detached garage and other outbuildings. It is located on a small lot whereas the Subject Property is located on a much larger site area of 6.43 acres. The Board finds this property to be inferior to the Subject Property.

37The Board finds the property located at 112 Riverside Drive to be similar in design as a raised bungalow with a larger building area and a smaller finished basement area. However, it is much older and has the same quality class of 6.0. It has an older and smaller detached garage whereas the Subject Property has a large detached garage and other outbuildings. It is located on a small lot whereas the Subject Property is located on a much larger site area of 6.43 acres. The Board finds this property to be inferior to the Subject Property.

38The Board finds the property located at 40 Third Street to be similar in design as a raised bungalow with a finished basement area. However, it has a much smaller building area and is much older. It has no garage whereas the Subject Property has a large detached garage and other outbuildings. It is located on a small lot whereas the Subject Property is located on a much larger site area of 6.43 acres. The Board finds this property to be much inferior to the Subject Property.

39The Board finds the property located at 9 Ecomadina Avenue has a similar sized finished basement area. However, it has a smaller building area and is much older. It has an older and smaller detached garage whereas the Subject Property has a large detached garage and other outbuildings. It is located on a small lot whereas the Subject Property is located on a much larger site area of 6.43 acres. The Board finds this property to be much inferior to the Subject Property.

40The Board finds the property located at 205 First Street to be slightly inferior to the Subject Property. It is newer having been built in 2004 and has a much larger building area of 1,604 sq. ft. It has a smaller finished basement area of 168 sq. ft., a shed, and a smaller and older detached garage that was built in 2004. It is located on a small lot whereas the Subject Property is located on a much larger site area of 6.43 acres. It has a time adjusted sale of $191,377. The Subject Property’s current value should be higher.

41The Board finds the value of $205,000 to be reasonable given the newer and much larger detached garage as compared to the closest inferior sale at 205 First Street. Also, the Subject Property is located on a much larger site area of 6.43 acres whereas the other inferior properties are located on smaller “lots.” Also, while, larger vacant lots may have a fairly nominal value as suggested by Mr. Renaud, the Board finds that the Subject Property’s larger site area still adds value.

42The Board has noted Mr. Renaud’s concern regarding the impact of the present tax rate as applied to a property’s assessed value and the resulting high property tax. Unfortunately, this is not an area within the Board’s jurisdiction.

43For all of these reasons, the Board finds that the likely current value of the Subject Property is $205,000.

Whether there should be an equitable reduction of the current value pursuant to s. 44.(3)(b) of the Act, and, if so, what should the amount of this reduction be

MPAC’s Evidence and Submissions

44Mr. Wishman relies on an “Equity Analysis Report” that considers the time adjusted sales of 30 single family detached properties between January 1, 2012 and December 12, 2015 located in close proximity to the Subject Property.

45In his Report, Mr. Wishman states that the level of appraisal is established by determining the median Assessment to Sales Ratio (“ASR”) in the sales sample. For purposes of the equity test, MPAC takes the position that equity is achieved if the median ASR falls between 0.95 and 1.05. In this case, the median ASR is 0.958.

46Mr. Wishman asserts that based on his analysis, similar properties in the vicinity have been assessed at or near their current values and that an equity adjustment is not required.

47Mr. Wishman concludes that the assessment should be confirmed at $205,000 for the 2017 and 2018 taxation years.

Appellant’s Evidence and Submissions

48Mr. Renaud asserts that the Subject Property is inequitably assessed in relation to similar properties and should be assessed at a maximum of $160,000.

49Mr. Renaud referenced properties in Table B that all have lower assessed values. The property at 35 Queen Street has a regular lot but it also has a large detached garage like the Subject Property.

Board’s Analysis and Findings

50Section 44.(3)(b) of the Act 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.”

51The purpose of equitable adjustment has been described as the equitable distribution of the tax burden according to the assessed value of property owned by taxpayers as follows by the Ontario Court of Appeal in Re Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) at page 2:

A prime objective of municipal taxation is the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the a uniform mill rate upon the assessed value of the ratepayer's taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

52In addressing equity in assessment, the Court, at page 6, also noted that:

an assessment made at the actual value of lands and buildings … would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred [emphasis added].

53The term “vicinity” is not defined in the Act, but refers to the appropriate geographical area that will yield a meaningful number of comparable properties (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (Ont. C.A.) at page 6).

54The test set out in s. 44.(3)(b) of the Act, requires that the Board refer to similar lands in the vicinity. Use as a point of similarity, may be, but is not necessarily determinative of similarity. In determining whether other lands are similar, the Ontario Divisional Court, in Municipal Property Assessment Corp. v. Loblaw Properties Ltd., 1010 ONSC 1299, applied the decision of the Ontario Divisional Court in Trizec Equities Ltd. v. Ontario Regional Assessment Commissioner, Region No. 27, [1988] O.J. No. 182. The Court stated at paragraph 23:

…All points of comparison must be considered. The Board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.

55The ASR analysis of a reasonable sample of sold properties is one method used to determine if properties in the vicinity are assessed below their current value. If other properties are assessed substantially below their current value, then a reduction is required to make the assessment of the Subject Property equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the sale price.

56Mr. Wishman relies on an Equity Analysis Report whose sample of time adjusted sales produced a median ASR of 0.958. He asserts that an equity adjustment is not required.

57Mr. Renaud refers to seven properties in Table B, all with lower assessments. Two properties, 205 First Street and 123 First Avenue have assessments that are lower than their sales values.

58The Board finds that the property at 305 Third Avenue has a larger building area and lot size than the Subject Property. However, the dwelling is older, has a lower quality class and the detached garage is both much older and smaller than that of the Subject Property. It makes sense that it should be assessed lower.

59The Board finds that the property at 35 Queen Street has a larger building area than the Subject Property. However, the dwelling is older and is built on a lot. It has detached garage with a comparable sized area of 1,427 sq. ft. However, it is older having been constructed in 2009. It makes sense that it should be assessed lower.

60The Board finds the property at 211 First Street to be a slightly newer two storey dwelling with a higher quality of construction rating and a larger building area. However, unlike the Subject Property, it has an attached garage and no outbuildings. It makes sense that it should be assessed lower.

61The Board finds the property at 123 Avenue to be a similar aged but a two storey dwelling with a larger building area. However, unlike the Subject Property, it has a much smaller detached garage and no outbuildings. It makes sense that it should be assessed lower.

62The Board finds that the property at 163 Brown Street with its assessed value of $40,000 appears to have no assessed value for the dwelling although it appears to be in use from the photograph in evidence.

63The Board noted at the hearing that the sales in MPAC’s Equity Study did not include four sales (Sales 1, 2, 3 and 5) included in MPAC’s Table A used in estimating the Subject Property’s current value. The Appellant also referred to Sales 2 and 5. This was unfortunate especially as two sales occurred in close proximity to the January 1, 2016 valuation date. The four properties have ASRs of 0.834, 0.732, 0.751 and 0.959.

64Including these four additional sales into MPAC’s sample results in a median ASR of 0.948. Applying the ASR of 0.984 to the current value of $205,000 results in an equitable value of $194,340 or $194,000 rounded.

CONCLUSION

65The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date, is $205,000. Furthermore, the Board finds that the evidence before it supports the conclusion that an equitable adjustment is required under s. 44.(3)(b) of the Act. The current value must be reduced from $205,000 to $194,000 in order to make it equitable with similar properties in the vicinity.

66The assessment of the Subject Property located at 131 First Avenue is reduced from $238,000 to $194,000 for the 2017 taxation year and from $205,000 to $194,000 for the 2018 taxation year.