Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 29, 2018

FILE NO.: WR 155492

Assessed Person(s): Michael James Pacey

Appellant(s): Michael Pacey

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

Respondent(s): Township of Rideau Lakes

Property Location(s): 696 North Shore Road and Concession 3, Part Lot 8

Municipality(ies): Township of Rideau Lakes

Roll Number(s): 0831-839-049-10200-0000 and 0831-839-049-14101-0000

Appeal Number(s): 3270035, 3288972, 3270047 and 3288916

Taxation Year(s): 2017 and 2018

Hearing Event No.: 701274 and 701276

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

Heard: July 26, 2018 in Portland, Ontario

APPEARANCES:

Parties	Representative
Michael Pacey	Self-represented
MPAC	Amy Raycroft
Township of Rideau Lakes	No one appeared

DECISION OF THE BOARD DELIVERED BY SCOTT McANSH AND JEAN-PAUL PILON

INTRODUCTION

1Michael Pacey is the owner 696 North Shore Road (the “First Subject Property”) and Concession 3, Part Lot 8 (the “Second Subject Property”) located in the Township of Rideau Lakes, Ontario. Almost all of the larger First Subject Property is in the managed forest class of property as is the entirety of the Second Subject Property.

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A. 31 (the “Act”), the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”).

3MPAC assessed the current value of the First Subject Property at $113,000 for the 2017 taxation year, but returned an assessment of $96,000 for the 2018 taxation year. MPAC is recommending that the First Subject Property be assessed at $96,000 for both taxation years. MPAC assessed the current value of the Second Subject Property at $23,500 for both the 2017 and 2018 taxation years. MPAC is recommending that assessment be reduced to $21,500 for both taxation years.

4Michael Pacey (the “Appellant”) took the position that MPAC’s assessment of current value for both properties is too high and that the correct current value of the First Subject Property is $44,000 and that the correct current value of the Second Subject Property is $7,000.

5Pursuant to subsection 40(11) of the Act, the Township of Rideau Lakes was a party to the proceeding. However, it did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on its behalf.

6Subsection 44(3)(b) of the Act directs the Board to reduce the current value of the Subject Property if similar lands in the vicinity have been assessed at a lower value (“equitable reduction”). The purpose of this provision is to fairly distribute the municipal tax burden according to the value possessed by each ratepayer. MPAC took the position that an equitable reduction is not required. The Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that, the for the 2017 and 2018 taxation years, the current value of the First Subject Property is $152,338 and the current value of the Second Subject Property is $23,673 as of the January 1, 2016 valuation date. The Board finds there should be no equitable adjustment. Those values are higher than the assessments that were returned to the assessment roll and MPAC has not filed a notice of intention to seek a higher assessment. The assessments are therefore confirmed.

Relevant Legislation

8The Act requires that we determine two things in this appeal. First, subsection 44(3)(a) requires that we 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, subsection 44(3)(b) of the Act requires that we “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.

9The valuation of managed forest is specially regulated. The assessment of managed forest is governed by section 32.1 of Ontario Regulation 282/98 (the “Regulation”). That provision requires that two separate valuations be conducted. First, the value of the land must be determined in accordance with subsection 19(5.2) of the Act, that is “based only on the current use of the land and not other uses to which the land could be put.” Secondly, subsection 32.1(2) sets out a regulated rate. The Regulation sets a value per acre for different parts of the province. The applicable rate here is $607 per acre. The Regulation requires that the lower value be used, and has a provision to apply in the event that the regulated rate is less than 31% of the value at the land’s current use. That provision is not applicable here.

Issue

10The only issue to be determined in these appeals is the correct current value of the two properties for the 2017 and 2018 taxation years.

Discussion, Analysis and Findings

MPAC’s Evidence

First Subject Property

11Amy Raycroft testified for MPAC and referred to MPAC’s Valuation and Equity Analysis Reports in her testimony prepared in anticipation of the hearing.

12MPAC’s evidence pertaining to the descriptions of the Subject Properties was not disputed. The First Subject Property has a lot area of 246.88 acres, 244.38 acres of which are classified as in the managed forest class, and 2.5 acres of which are classified in the residential class. The Second Subject Property is entirely in the managed forest class and has an area of 39 acres.

13MPAC acknowledged that a structure once sitting on the residential portion of the First Subject Property has been demolished since the previous valuation date, January 1, 2012. That structure was therefore not taken into account in MPAC’s opinion of current value in this cycle. MPAC’s evidence was that part of the First Subject Property occupied by solar panels but that their presence had no impact on MPAC’s current value assessment.

14It was not disputed that the direct comparison approach was the appropriate method with which to determine current value, but those comparisons must only be to properties with the same current use as the Subject Properties. To quote MPAC’s Valuation Report, “the direct comparison approach estimates the current value of a subject property by adjusting the sale price of other sold properties for differences in property characteristics between the subject property and other sold properties.”

15MPAC selected seven proposed comparable properties that had been the subject of sales transactions in the period January 31, 2013 to March 3, 2017. All of these properties were vacant residential land. After applying MPAC’s time adjustments, the price per acre for these seven proposed comparable properties ranged from $393 per acre to $1,406 per acre. The average sale price of these seven proposed comparable properties was $834 per acre, with a median of $900 per acre. MPAC narrowed the average price per acre for its proposed comparable properties 1, 4, 5, 6, and 7, which had an average price of $848 per acre and a median rate of $930 per acre.

16MPAC’s representative testified that the fourth and sixth proposed comparable properties were the most comparable because of their “size, use and location” in specific ways that were not explained at the hearing. The median of those two proposed comparable properties was $858.73. By multiplying that by the area of the land in the managed forest class in the First Subject Property, 244.38 acres, MPAC arrived at valuation of $212,000.

17MPAC then submitted that the current value of the First Subject Property was $96,000. $95,100 of this amount was apportioned in the managed forest property class, and $900 in the residential property class. The $900 in the residential property class is not in issue.

18MPAC stated that the value of the current use of the land was $95,100, or $390.90 per acre. As noted above, the regulated rate is $607 per acre, or $148,338.66. The current use value was lower, so MAPC put that forward as their position of the current value of the First Subject Property.

19MPAC retrieved data for 32 proposed comparable properties that had transacted over a six year period in its Equity Analysis Report for the First Subject Property, but based its equity analysis on seven of those proposed comparable properties highlighted in its report which MPAC claimed were similar in size. Using these figures, MPAC’s position was that the assessment was at or near its current value, and that no adjustment was required.

Second Subject Property

20The Second Subject Property is entirely in the managed forest property class. MPAC chose six proposed comparable properties that had transacted for comparison that ranged in value, after MPAC’s time adjustments, from $730.50 per acre to $2,782 per acre. After determining the third and sixth properties were the most comparable for “size, use and location” at an average price of $1,735.16 per acre, MPAC multiplied that amount the Second Subject Property’s 39 acres to arrive at an assessed value of $67,000.

21At the hearing, MPAC’s representative indicated that MPAC had started with a current value for the Second Subject Property of $44,000, which it reduced to $21,500 because of building restrictions of which it had been unaware. In applying the Regulation, MPAC stated that the current use value was $31,809.60, or $815.63 per acre, where the regulated rate of $607 per acre amounted to $23,673. Although MPAC’s written report indicated MPAC’s current value assessment was $23,500, MPAC’s representative at the hearing said that MPAC was seeking a determination that the current value of the Second Subject Property is $21,500.

22MPAC took the same approach in its equity analysis of the Second Subject Property as it did with the First Subject Property where it found 30 proposed comparable properties, then highlighted seven, in determining no equitable adjustment was required.

Appellant’s Evidence

23The Appellant testified that the proposed comparable properties selected by MPAC were located far from the First Subject Property. Instead, he made reference to three proposed comparable properties and arrived at a current value of $44,000 or $181 per acre, which appears to be more or less the average of the assessed values of these three properties. None of the Appellant’s proposed comparable properties had been the subject of sales transactions after January 1, 2012.

24The returned assessment for the First Subject Property for January 1, 2012 was $64,000, $56,000 of which was apportioned to the land and $8,000 to the residence residential portion including the building that no longer exists.

25The Appellant testified that the Second Subject Property is 700 meters from a road and relied on the same evidence as for the First Subject Property in arguing that its current value should be based on the same $181 per acre to arrive at $7,000.

26The returned assessment of the Second Subject Property was $14,000 in 2012.

Analysis

27MPAC has the burden of proving the correctness of the current value of the lands pursuant to subsection 40(17) of the Act. It did not meet that burden on a balance of probabilities for either of the Subject Properties in these appeals.

28In the case of the First Subject Property, MPAC submitted that the current value was $96,000 when its analysis supported a substantially different value of $212,000. The fact that the former number was significantly lower than that which might have been supported by MPAC’s evidence did not prove its correctness or its fairness, as was suggested by MPAC’s representative.

29Similarly, there was no explanation justifying MPAC’s final conclusion that the current value of the Second Subject Property was $23,500 where its analysis supported a current use value of $67,000.

30MPAC did not provide a path from the evidence it presented to its suggested current value for either property. When directly asked how the evidence supported its suggested current value, it could not provide an answer, relying instead on the value provided by its computer model. MPAC is required by the Act to prove its suggested current value with evidence. It did not do so here. There is no way to arrive at a value of $96,000 or $23,500 from the evidence provided by MPAC.

31The Board therefore determines that none of the evidence relied upon by MPAC supports its opinions of current value. MPAC failed to meet its statutory burden to prove the correctness of its current value assessments.

32In a recent decision of the Board, Jay Patry Enterprises Inc. v Municipal Property Assessment Corporation Region 5, 2019 CanLII 39629 (ON ARB), 2018 CanLII 70338 (“Patry”), it was determined at paragraph 40 that “if MPAC has not met its burden, the taxpayer’s evidence must be analyzed to see if it is capable of proving that a particularly current value is more likely than not.”

33In this case, the Board finds that the Appellant did not provide evidence to support his opinions of value because his was not evidence of sales, but of assessments. It was not suggested at the hearing that any method other than the direct comparison approach, requiring evidence of sales not assessments, should be applied.

34It is not the case here, however, that there was insufficient evidence of current value for the managed forest part of the First Subject Property. There was evidence before the Board of current value because the Regulation sets out a regulated rate of $607 per acre. Returning to the Regulation’s methodology, the first step is to determine the likely sale value of the land, which cannot be determined by the evidence before the Board. Then, the regulated rate is to be determined. Paragraph 5 of subsection 32.1(1) of the Regulation is clear that “in any other case” the current value of the land is the regulated rate.

35In the case of the First Subject Property, the managed forest class portion has a lot area of 244.38 acres. Therefore, the current value is the regulated rate of $144,338.

36In terms of the residential portion of the First Subject Property, the Patry decision then provides that “if there is insufficient evidence in the record that is capable of proving current value, the Board should fix the assessment at the last uncontested value. This framework provides meaning to both subsection 40(17) and clause 44(3)(a).“ The last uncontested assessment of the residential component is $8,000. We note that the property has changed significantly since that assessment, with the home on the property having been demolished in the meantime. However, we do not have submissions on the appropriateness of deviating from the approach set out in Patry when there is a change to the property. Given that MPAC has not filed for a higher assessment, the application of Patry will have no negative impact on the taxpayer here. There may be future cases where this Board will need to consider the application of Patry when there are physical changes to a property since the last contested assessment, but we need not do so.

37As a result, the Board finds that the current value of the residential portion of the First Subject Property should be $8,000.

38The Second Subject Property is, however, entirely in the managed forest class. Applying the regulated rate of $607 to the lot area of 39 acres, the current value assessment should be $23,673.

DECISION

39The current value of the First Subject Property is $152,338 for the 2017 and 2018 taxation years, with $144,338 in the managed forest property class and $8,000 in the residential property class. MPAC has not served a notice of intention to seek a higher assessment, as required by Rule 40 of the Board’s Rules of Practice and Procedure. Therefore, the assessment of the First Subject Property is confirmed at $113,000 for the 2017 taxation year and $96,000 for the 2018 taxation year.

40The current value of the Second Subject Property is $23,673 for the 2017 and 2018 taxation years. Again, MPAC has not served a notice of intention to seek a higher assessment, as required by Rule 40 of the Board’s Rules of Practice and Procedure. Therefore, the assessment of the Second Subject Property is confirmed at $23,500 for the 2017 and 2018 taxation years.

41An equitable reduction of the current value of either of the Subject Properties, pursuant to s. 44(3)(b) of the Act, is not required.