Braid v. Municipal Property Assessment Corporation, 2018 CanLII 104606

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 31, 2018

FILE NO.: WR 154492

Assessed Person: Kim Elizabeth Braid; Matthew Phillip Braid

Appellants: Kim Braid; Matthew Braid

Respondent: Municipal Property Assessment Corporation (“MPAC”) Region 02

Respondent: Township of Montague

Property Location: 384 Wood Road

Municipality: Township of Montague

Roll Number: 0901-000-020-12800-0000

Appeal Number(s): 3279517 and 3289017

Taxation Year(s): 2017 and 2018

Hearing Event No. 700980

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

Heard: July 24, 2018 in Lanark County, Ontario

APPEARANCES:

Parties

Representative

Kim Braid and Matthew Braid

Self-represented

MPAC

Amy Raycroft

Township of Montague

No one appeared

DECISION OF THE BOARD DELIVERED BY SCOTT McANSH

REASONS

Background

1Kim and Matthew Braid appeal the 2017 and 2018 assessments of their property, located at 384 Wood Road in Township of Montague Township, on the basis that the assessment is too high. The Braids have concerns with the degree to which the assessment has increased over the previous assessed value, and challenge the information about the property that MPAC has in it files. MPAC made a number of corrections to its data in the course of preparing for this hearing. There is only one issue that remains in dispute between the parties: the proper soil classification of 31 acres of farmland.

2MPAC values farmland on a soil classification system. They have established six classes of land, with Class 1 being the best, most productive farmland, and Class 6 being the least desirable farmland. Each class of farmland is assigned a particular value per acre, which is developed regionally based on sales information. The 31 acres of land in dispute here ae classified by MPAC as Class 5, while the Braids contend that those 31 acres are properly classified as Class 6.

3For the reasons that follow I find that the 31 acres in dispute are Class 6 farmland. As a result, the current value of the property for the 2017 and 2018 taxation years is $211,000. There is nothing in the evidence that indicates that it would be unfair or inequitable to assess the property at its current value. I therefore reduce the 2017 assessment of the property from $314,000 to $211,000. I also reduce the 2018 assessment of the property from $249,000 to $211,000.

The Legislation

4The Act requires that I determine two things in this appeal. First, clause 44(3)(a) requires that I determine the current value, or what the property would have sold for in an arm’s length transaction on January 1, 2016. Once the current value has been determined, clause 44(3)(b) of the Act 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.

5The Act also has specific requirements that must be met when valuing farmland, set out subsection 19(5). There are two main requirements. Clause (a) states that “consideration shall be given to the current value of the lands and buildings for farm purposes only.” Clause (b) states that “consideration shall not be given to the sales of lands and buildings to persons whose principal occupation is other than farming.” These provisions mean that farmland that is sold for its recreational value or development potential cannot be considered in determining the value of farmland. Other, non-farming, uses for the land or buildings cannot be considered. Only the sales of farmland to farmers intent on farming the land can be considered.

Approaches to Value

6The Braids’ property is a 98 acre farm with a house on it, as well as number of barns and sheds. MPAC put forward two approaches to valuing the property: the cost approach and the direct comparison approach. The cost approach looks at what it would cost to replace the buildings on the land, deprecates that value, and then adds that depreciated building value to the land value. It is the valuation method most often used by MPAC for farmland. The direct comparison approach looks at similar properties that have sold and uses those as a guide for what this property likely would have sold for. Farmland must be compared to farmland that is sold for farm purposes, so not all sales can be used for farm properties.

7MPAC relies on its cost valuation for its recommended value of $214,000. However, MPAC also presents the sales of six properties, which it says supports a value of $250,000 for the Braids’ property. The sales put forward by MPAC are summarized as:

No.

Address

Acreage

House Size (sq ft)

Year Built

Sale Date

Sale Price

384 Wood Road

98

913

1935

1

1054 Mccrea Road

15.29

1,051

1984

Nov 2107

$162,000

2

2347 Nolans Road

96.6

1,126

1971

Dec 2011

Oct 2013

$273,000

$285,000

3

1681 County Road 43

50

912

1900

Mar 2016

$110,000

4

1053 Matheson Road

6.4

2,421

1923

Nov 2015

$280,000

5

435 Wood Road

36.82

2,219

2002

Mar 2013

$420,000

6

704 Macpherson Road

155.55

1,322

1875

Aug 2012

$245,594

7

6331 Roger Stevens

37.98

1,496

1960

Mar 2016

$221,000

8MPAC states that all of these sales were as farms, to farmers. I accept that they are appropriate sales to use in valuing farmland. However, it is difficult to draw any meaningful conclusions from these sales.

9Only Sales 3, 4, and 7 sold within a year of January 1, 2016. Markets change over time, so it is difficult to draw any value conclusions from sales that took place far removed from the valuation day. I will therefore only consider those three sales. Sale 3 has a similarly sized house, though half the land. The Braids’ property is likely superior to Sale 3. That is an indication that this property would have sold for more than $110,000. Sale 4 has a much larger house and a significantly smaller lot. Those factors pull strongly in opposite directions. I cannot say if the Braids’ property is superior or inferior to Sale 4. Finally, Sale 7 has a newer, larger, house on a lot that is a third the size of the Braids’ property. Given the limited amount of tillable land on the Braids’ property, I find that the house factors are more significant and make the Braids’ property inferior to Sale 7. That is an indication that the property likely would have sold for less than $221,000.

10MPAC’s sales indicate that the Braids’ property likely would have sold for between $110,000 and $221,000. A more specific value must come from the cost approach.

Cost Approach to Value

11The cost approach relies on accurate and detailed information about the property. That information is entered into costing formulas to arrive at values, including physical deprecation. Accurate data is required in order to return an accurate assessment.

12MPAC inspected the property on March 22, 2018 and made a number of changes to the information it had on file. The Braids no longer contest any of the information or values assigned to the structures on the property. The agreed value the home is $47,228, and the agreed value of the barns and sheds is $87,439.

13The only dispute is around the value of the farmland. MPAC and the Braids agree that the farm can be conceptually broken into four components. There are 28 acres that the Braids use as hayfields that the parties agree is Class 4 farmland with a value of $37,145. The parties also agree that one acre of Class 4 farmland should be assigned to the land around the house, with a value of $1,326. There are 38 acres at the back of the parcel that are partially wooded and swampy. The parties agree that those 38 acres are Class 6 farmland with a value of $20,920.

14The only dispute is on the classification and value of the remaining 31 acres of farmland. That land is used as fenced pasture for the Braids’ livestock. MPAC says that is Class 5 farmland, while the Braids say it is Class 6 farmland. The parties agree on the value per acre to assign to those 31 acres, depending on which class they fall into: Class 5 is valued at $780.95 per acre, while Class 6 is valued at $550.67 per acre. The only disagreement is how to classify those 31 acres.

Soil Classification

15The Braids adopt MPAC’s Methodology Guide: Valuing Farms in Ontario, dated August 2016 (the “Guide”), for soil classification metrics. MPAC also relies on the Guide. The Guide sets a process for classifying soil. There are seven factors that are assigned a number of points based on specific metrics. The points from each factor are added together to arrive at a total score. The more points, the lower the soil classification. For the 31 acres in dispute MPAC and the Braids agree on the proper number of points for six of the seven categories:

1. Soil texture – 5 points

2. Topography – 10 points

3. Stoniness – 20 points

4. Drainage – 5 points

5. Flooding – 0 points

6. Erosion – 0 points

16For the seventh category, depth to bedrock, the parties agree that the soil is shallow, which is described as being between 3” and 18” deep. That category has a point range of 30-65 points. MPAC assigned the depth to bedrock factor 30 points, while the Braids contend that there should be 45 points assigned to that factor. That difference of opinion makes MPAC’s point total 70, while the Braids’ is 85. The line between Class 5 and Class 6 farmland is at 80 points. That is, land with 75 points is Class 5 and land with 80 points in Class 6.

17The only evidence before me on the specific depth to bedrock of these 31 acres is from the Braids. MPAC admits that the soil is shallow, but does not say how shallow. The Braids evidence is that the average depth to bedrock on these 31 acres is 12”. They have photographs of stakes driven into the ground. They also have evidence that they had built barns on this area on the bedrock, which was less than 12” below grade. They have historical reports of Lanark County stating that the soil in this area is thin. That is compelling evidence that the depth to bedrock of these 31 acres averages 12”. The question is how many points should be assigned to a depth of 12”.

18MPAC’s position is that the specific number of points within the range is at the sole discretion of the assessor. It argues that this cannot be Class 6 farmland because that class is only for the worst land, and that the Braids use these 31 acres for livestock grazing. MPAC says that 30 is the proper number of points for shallow soil, with values higher than 30 reserved for only the most extreme cases.

19The Braids argue that the Guide provides a metric for assigning points in providing both a range of points and a range of depths. The Guide states that there are 30 to 65 points for depths between 18” and 3”. The more shallow the soil, the higher the number of points. Spreading the 35 points of the range evenly over the 15” of variation in depth results in there being 2 1/3 points per inch of soil depth. A 12” depth is 6” more shallow than the outer edge of the range so would be six times 2 1/3 points more than that the minimum, which is 14 points higher than 30. That is, 44 points should be assigned for depth to bedrock. The Guide states that points should be assigned in increments of 5, so the Braids round the points for depth to bedrock to 45.

20I accept the Braids’ assessment of how points for depth to bedrock should be allocated. The Guide sets out an objective measure to ensure consistency in the assessment of farmland. A range of 35 points for shallow soil amounts to a potential difference of three property classes. Some metric for allocating those points is reasonable and I accept the Braids’ proposed linear approach. I cannot, obviously, dictate how MPAC assigns points for depth to bedrock in general, but I agree with the Braids that these 31 acres are Class 6 farmland.

21That conclusion is also consistent with the definitions of Class 5 and Class 6 farmland set out in the Guide. Class 5 is defined as land that “is generally unsuited to cultivation, but can be used for grazing.” Class six is defined as land that “should be kept in vegetation because of steepness of slope, severe soil erosion, shallow soil, or other features that make cultivation impractical. This land is capable of producing only indigenous crops or is suitable for moderate grazing.” The Braids’ evidence is that they need to be careful in how much they allow the livestock to graze these 35 acres because this land is susceptible to overgrazing. That is evidence of moderate grazing. They also provided evidence that the land should be kept in vegetation. I find that these 31 acres are Class 6 farmland.

22Applying the agreed $550.67 rate per acre to these 31 acres results in a value of $17,070.77 for this portion of the land.

Current Value Conclusion

23The sales presented by MPAC suggest a range of value between $110,000 and $221,000. The cost approach is the best evidence of the specific value of this property. The parties agree on all components but one. They agree that the cost approach estimates a value of $47,228 for the house, a value of $87,439 for the barns and sheds, a value of $37,145 for the hayfields, a value of $1,326 for the acre of land around the house, and a value of $20,920 for the back of the parcel. That is a total agreed value of everything but the 31 disputed acres of $194,058.

24I find that the 31 acres in dispute are properly classified as Class 6 farmland, with a value of $17,070.77. Adding that to the agreed values results in a total current value of $211,128.77, which I would round to $211,000. I find that to be the current value of the Braid’s property for the 2017 and 2018 taxation years.

25This is farmland that may be eligible for the farm property class. That is not a decision I can make, but I am required to value the land pursuant to paragraph 1 of section 31 of the General Regulation, O Reg 282/98. The majority of the Braids’ property is farmland used for farming. Only the house, and the acre of land around the house, are used for residential purposes. As noted above, the agreed value of the house is $47,228 and the agreed value of the acre of land around the house is $1,326. The total residential value is therefore $48,556, which I would round to $49,000. The remaining $162,000 is farm land used for farm purposes.

Equity

26Once the current value has been determined I am required, by clause 44(3)(b), to have reference to the assessment of other property in the vicinity to see if it would fair assess this property at its current value. I have examined the assessments in evidence and there is nothing before that indicates that it would unfair or inequitable to assess this property at its current value of $211,000.

Conclusion

27The current value of the Braids’ property for the 2017 and 2018 taxation year is $211,000. There is no indication that it would be unfair or inequitable to assess the property at that value. I therefore reduce the 2017 assessment of the property from $314,000 to $211,000, $162,000 of which is farm land used for farm purposes, and $49,000 of which is in the residential property class. I also reduce the 2018 assessment of the property from $249,000 to $211,000, $162,000 of which is farm land used for farm purposes, and $49,000 of which is in the residential property class.