Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 31, 2018

FILE NO.: WR 155742

Assessed Person(s): Sergio Petrella; Rhonda Jeanne Petrella

Appellant(s): Sergio Petrella; Rhonda Jeanne Petrella

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 07

Respondent(s): Township of North Kawartha

Property Location(s): 68 Bayshore Road

Municipality(ies): Township of North Kawartha

Roll Number(s): 1536-010-003-18100-0000

Appeal Number(s): 3267972, 3267971 and 3292980

Taxation Year(s): 2016, 2017 and 2018

Hearing Event No. 702885

Legislative Authority: Section 40 and 33 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: August 15, 2018 by telephone conference call

APPEARANCES:

Parties Representative

Sergio Petrella and Rhonda Jeanne Petrella Self-represented

MPAC Aaron Glover

Township of North Kawartha No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1Sergio Petrella and Rhonda Jeanne Petrella (the “Appellants’”) are the owners of 68 Bayshore Road (the “Subject Property”), which is located in the Township of North Kawartha.

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 2013 to 2016 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2012; and for the 2017 and 2018 taxation years MPAC is required to assess this value as of the January 1, 2016 valuation date.

3MPAC has assessed the current value of the Subject Property at $338,000 for the 2016 taxation year; and $364,000 for the 2017 and 2018 taxation years.

4In 2015 a building permit was taken out with an estimated value of $85,000 for an addition of 538 square feet (“sq. ft.”), a 127 sq. ft. deck, septic system and electrical work. As a result, MPAC has filed a change notice for s. 33 – Land omitted from the tax roll with an omitted value of $63,000, effective date of October 6, 2016; and $92,000 effective January 1, 2017. That increased the total assessment of the property to $401,000 for the 2016 taxation year and $456,000 for the 2017 and 2018 taxation years.

5The Assessment Review Board (the “Board”) must determine the current value of the Subject Property for the 2016 taxation year; and the current value for the 2017 and for the deemed 2018 taxation years (“current value”).

6The Appellants have filed appeals for the 2016, 2017 and 2018 taxation years with the Board, pursuant to s. 33 and s. 40 of the Act. It is their position that MPAC’s assessments of current value are too high and that the correct current value is $320,000 for the 2016 taxation year; and $426,000 for the 2017 and 2018 taxation years. At this hearing, MPAC takes the position that its assessed values are correct.

7Pursuant to s. 40(11) of the Act, the Township of North Kawartha is a party to this proceeding. However, no one joined the telephone conference call on its behalf.

8Section 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 of the property possessed by each ratepayer.

9MPAC takes the position that an equitable reduction is not required. The Appellants did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.

10At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value of the Subject Property is $540,000 for the 2016 taxation year; and the current value of the Subject Property is $519,000 for the 2017 and 2018 taxation years. MPAC is not seeking an increase in the returned assessments. Therefore, the Board confirms the omitted assessment of $63,000, effective October 6, 2016; confirms the omitted assessment of $92,000 effective January 1, 2017; and confirms the returned assessment of $456,000 for the 2018 taxation year.

Relevant Legislation

11The relevant sections of the Act are as follows:

1. “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.

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

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:

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.

s. 32 Correction of errors, etc., in assessment roll

32. (1) Despite the delivery of any notice provided for under this Act, the assessment corporation at any time before the time fixed for the return of the assessment roll may correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly.

Same, factual error only

(1.1) Despite the delivery of any notice provided for under this Act, for 2009 and subsequent taxation years, the assessment corporation may, at any time during the taxation year, correct any error in the assessment or classification of a property that has resulted from incorrect factual information about the property, and not from a change in opinion as to current value, . . .

s. 33 Change re land omitted from tax roll

33. (1) The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted:

34. The assessment corporation shall make any assessment necessary to correct the omission. . . .

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.

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.

ISSUES

12The issue to be determined on this appeal is the correct current value of the Subject Property for the taxation year 2016; and the correct current value for 2017 and 2018 taxation years.

Description of the Subject Property

13The Subject Property is a seasonal/recreational dwelling, located at 68 Bayshore Road, in the Township of North Kawartha. The Subject Property was built in 1959, with a total building area of 917 sq. ft., and a lot size of 25,571 sq. ft. (0.61 acres).

14In 2015 a building permit, estimated at $85,000, was taken out for a 538 sq. ft. addition to the structure; a 127 sq. ft. deck; septic system, and electrical work. With the addition to the structure, the total building area is 1,455 sq. ft. (917 sq. ft. original building area + 538 sq. ft. additional area) and the effective year is 1980.

DISCUSSION, ANALYSIS AND FINDINGS

The correct current value of the Subject Property as of the January 1, 2012 valuation date; and the correct current value as of the January 1, 2016 valuation date.

MPAC’S Evidence

15Aaron Glover represents MPAC. Mr. Glover prepared a Valuation Report respecting the Subject Property which he submits into evidence.

16Mr. Glover testifies that he inspected the Subject Property on March 29, 2018 and observed that the site has a northern exposure, the shoreline is sloping and rocky, the basement under the addition is unfinished, and appears to be a split-level.

17In support of current value based on the January 1, 2012 valuation date, Mr. Glover presents a sales analysis of four suggested comparable properties sold in 2011 and 2012 in the same homogeneous neighbourhood as the Subject Property. The suggested comparable properties are located at 213 Walkes Road, sold in 2012; 155 Woods Bay Road, sold in 2012; 60 Moffat Lane, sold in 2012; and 11 Island View Trail, sold in 2011. The analysis contains both actual sales and time-adjusted sale prices.

18Mr. Glover testifies that three of the suggested comparable properties at 213 Walkes Road; 155 Woods Bay Road; and 11 Island View Trail are inferior in age, building size, and frontage; and the fourth suggested comparable property at 60 Moffat Lane is relatively similar to the Subject Property in age, total building size, and frontage.

19An analysis of the sales shows that the actual sale prices of these suggested comparable properties range from $359,900 to $452,000; and the time adjusted sale prices range from $370,051 to $464,749. These four suggested comparable properties have on average a total building area of 1,079 sq. ft., a frontage of 99 feet, year built 1977 and an average time adjusted sale price of $371.32 per sq. ft.

20Based on the above sales analysis, and taking into consideration the 2016 improvements to the Subject Property, Mr. Glover is of the view that the sale at 60 Moffat Lane is the most similar to the Subject Property and best indicator of current value, with a time adjusted sale price $464,749 ($371.50 per sq. ft. based on total building area). Applying the sale price of $371.50 per sq. ft. to the Subject Property results in a value of $540,532.5 rounded to $540,000 ($371.50 x 1,455 sq. ft. based on the total building area).

21Based on this analysis, Mr. Glover is of the view that the current value is $540,000.

22In support of current value as of the valuation date of January 1, 2016, Mr. Glover presents five sales of similar type property, four of which is located in the same homogeneous area, P48, and the fifth in homogeneous area P47. These suggested comparable properties are located at 162 Bayshore Road, sold in 2014; 23 Island View Trail, sold in 2017; 264 Doc Evans Road, sold in 2014; 63 Doc Evans Road, sold in 2016; and 155 Hall’s Road, sold in 2015. The analysis contains both actual sales and time-adjusted sale prices.

23An analysis of the sales shows that the actual sale prices of these suggested comparable properties range from $475,000 to $625,000; and the time adjusted sale prices range from $457,479 to $565,558. These five suggested comparable properties have on average a total building area of 1,216 sq. ft.; a frontage of 3.78 feet; year built 1959; an average time adjusted sale price of $437.71 per sq. ft.; and a median time adjusted sale price of $446.02.

24Based on the analysis, Mr. Glover is of the view that the best evidence in support of current value is the suggested comparable located at 23 Island View Trail, sold in 2017; and 63 Doc Evans Road, sold in 2016. Mr. Glover testifies that these two suggested comparable properties have a garage which is assessed at $40,000 each, unlike the Subject Property which has no garage. When the time adjusted sale price is adjusted for the garage it reflects an average adjusted sale price of $370.53 per sq. ft..

25Applying this adjusted sale price per sq. ft. to the Subject Property results in a value of $539,000.

MPAC’s Submissions

26In regard to the issues surrounding the phased-in values and other information contained in Property Assessment Change Notice, MPAC states that prior to today’s hearing he had spent many hours explaining the information contained in the assessment change notice. MPAC also spent time at today’s hearing explaining that the information is to show the impact of the addition on the assessed value for the January1, 2012 valuation date and the January 1, 2016 valuation date. MPAC also states that there is additional information that shows the change in assessment from the January 1, 2008 valuation date to the January 1, 2012 valuation date for comparison. MPAC states that the similar type information would be included in the Property Assessment Change Notice for the January 1, 2016 valuation date.

27Relying on its evidence, MPAC submits that the correct current value for the Subject Property for the 2016 taxation year is $540,000. Mr. Glover argues that this value supports the returned value of $401,000 and that MPAC is not seeking an increase in assessment and asks to have the returned assessment confirmed.

28MPAC also argues that the correct current value for the Subject Property for the 2017 and 2018 taxation years is $539,000. Mr. Glover submits that this value supports the returned value of $456,000 and that MPAC is not seeking an increase in assessment and asks to have the returned assessment confirmed.

Appellants Evidence

29Sergio Petrella represents himself and Rhonda Jeanne Petrella. The Appellants present the same evidence in support of current value for both the January 1, 2012 valuation date and the January 1, 2016 valuation date.

30The Appellants raise two issues for the appeal for the 2016 taxation year:

I. That there is no justification for increasing the January 1, 2012 returned assessment from $338,000 to $401,000 for the January 1, 2016 taxation year; and no justification for increasing the January 1, 2016 returned assessment from $364,000 to $456,000 for the January 1, 2017 taxation year.

II. That it is inappropriate to incorporate the renovation into the assessment for the valuation date January 1, 2012; and for the valuation date January 1, 2016.

31The Appellants also raise questions relating to phased-in values and information contained in assessment notices, which they claim were not addressed satisfactorily by MPAC. The Appellants want to know why there is a phased-in value of $55,000 for the period 2017 to 2020; the relevance of including the increase in assessments from January 1, 2008 valuation date to the January 1, 2012 valuation date; and why is there a “revised assessment” value of $63,000 and also an assessment value of $63,000; and why does the 2017 notice shows a phased-in tax increase of $7,250.

32The Appellants testify that prior to undertaking the decision to renovate the Subject Property in 2015 they requested a fair market value for the Subject Property from Ambrose Moran, Broker, owner of Ambrose Moran Realty Inc., who has served the area for a long time. The Appellants testify that Mr. Moran provided them with an evaluation that the Subject Property would likely sell for $300,000 to $310,000. Mr. Moran recalls in an email dated March 26, 2018, sent to the Appellants quoting a market value of $330,000 in the summer of 2015.

Appellants’ Submissions

33The Appellants submit that he cannot find any relevant statutes and regulations that require renovations completed in late 2016 to be retroactively applied to January 1, 2016 assessment.

34The Appellants submit that there is no justification for increasing the January 1, 2012 returned assessment from $338,000 to $401,000 for the January 1, 2016 taxation year; and no justification for increasing the January 1, 2016 returned assessment from $364,000 to $456,000 for the January 1, 2017 taxation year for the Subject Property.

35Relying on their evidence, the Appellants submit that the correct current value for taxation years 2016 is $320,000; and the correct current value for the 2017 and 2017 taxation year is $426,000.

Findings on Current Value

36Under 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 property on the valuation date or close to it. If, as in this case, no such transaction took place, 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, 2012; and the valuation date of January 1, 2016.

37The Board has considered the properties with sales. To enable an estimate of value for the property to be derived from suggested comparable properties, there must be sufficient comparable elements, 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.

38In reviewing all of the evidence in support of current value for the valuation date of January 1, 2012, the Board accepts MPAC’s evidence that the best evidence in support of current value is the sale at 60 Moffat Lane with a time adjusted sale price $464,749 ($371.50 per sq. ft. based on total building area). That this sale price per sq. ft. when applied to the Subject Property results in a value of $540,532.5 rounded to $540,000 ($371.50 x 1,455 sq. ft. based on the total building area).

39In reviewing all of the evidence in support of current value for the valuation date January 1, 2016, the Board did not rely on the three sales which occurred in 2014 and 2017, because these three sales are too far removed from the valuation date of January 1, 2016, to be a true test of current value.

40In regard to the remaining two sales at 63 Doc Evans Road, sold in 2016; and 155 Hall’s Road, sold in 2015, the Board finds the best evidence is the sale at 63 Doc Evans Road, sold in 2016, which sold at an adjusted sale price of $357.12 (adjusted for time and garage). When this adjusted sale price is applied to the Subject Property, it results in a value of $519,609.6 rounded to $519,000.

41On the contrary, the Board rejects the Appellants’ evidence because the Appellants presented no sales evidence. Instead, the Appellants present an email dated March 26, 2018 from Ambrose Moran, Broker owner of Ambrose Moran Realty Inc. in which he estimated a market value of $330,000 (summer 2015) for the Subject Property. The Board rejects this opinion of value in support of current value for the January 1, 2012 valuation date and also for the January 1, 2016, because Mr. Moran presented no factual evidence to show how he arrived at the value of $330.000 stated in his email; and Mr. Moran was not in attendance to be cross-examined on this opinion of value.

42In regard to the issue of no justification for increasing the January 1, 2012 returned assessment from $338,000 to $401,000 for January 1, 2016 taxation year; and increasing the January 1, 2016 returned assessment from $364,000 to $456,000 for January 1, 2017 taxation year, the Board finds that the justification is the addition to the structure of the Subject Property which was done in the taxation year 2016.

43The addition reflects a change of $63,000 in the returned assessments based on the valuation date January 1, 2012; and a change of $92,000 in the returned assessment based on the valuation date January 1, 2016. These changes in the total square footage reflect the impact on the assessed values of the Subject Property.

44The assessment value for January 1 to October 5, 2016 was $338,000. The revised (omitted) assessment of $63,000 for the valuation date January 1, 2012 has an effective date of October 6, 2016; and the revised (omitted) assessment of $92,000 for the valuation date January 1, 2016 has an effective date of January 1, 2017.

45In regard to the issue of appropriateness of incorporating the renovation into the returned assessment as of January 1, 2012; and returned assessment as of January 1, 2016, the Board finds that there is a requirement under s. 33(1) 1. of the Act as stated above, that land liable to assessment in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and where no taxes have been levied for the assessment omitted, the Assessment Corporation shall make any assessment necessary to correct the omission.

46Another reason is that property is assessed based on its current state and condition at the return of the Roll (2nd Tuesday after December 1) each year. For the 2016 taxation year, the question is what the property, as it was on December 15, 2015 would have sold for on January 2012. In this case, MPAC has an obligation to add things that are missed.

47In regard to questions relating to phased-in values and information contained in Property Assessment Change Notices, the Board finds that phased-in values and other information on the Property Assessment Change Notices are included to show the valuation impact of the addition to the structure on the assessed values and associated tax implications for the Subject Property. The notice also includes the effective dates to show when the omitted values come into effect (e.g. the omitted value of $63,000 is effective October 6, 2016 as opposed to January 1, 2016); and it provides comparative information like the degree of change in the returned assessment from the January 1, 2008 valuation date to the returned assessment of January 1, 2012 valuation date for the Subject Property.

DECISION

48Based on all of the evidence, the Board finds the current value for the valuation date of January 1, 2012 to be $540,000; and the current value for the valuation date of January 1, 2016 is $519,000. MPAC has not filed a notice of intension to seek a higher assessment, as required by Rule 40 of the Board’s Rules of Practice and Procedure, so the Board will not increase the assessment. Therefore, the Board confirms the returned assessment of $401,000 for the 2016 taxation year, and confirms the returned assessment of $456,000 for the 2017 and 2018 taxation years.