Sanyogta Anand and Pavanveer Singh v. Municipal Property Assessment Corporation, Region 3, 2018 CanLII 104617

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

November 1, 2018

FILE NO.:

WR 155042

Assessed Persons:

Emila Anand, Rita Anand, Paul Anand, Pavanveer Singh and Sanyogta Anand

Appellants:

Sanyogta Anand, Pavanveer Singh

Respondent:

Municipal Property Assessment Corporation (“MPAC”), Region 3

Respondent:

City of Ottawa

Property Location:

4737 Milton Road

Municipality:

City of Ottawa

Roll Number:

0614-500-301-09700-0000

Appeal Numbers:

3267978 and 3290246

Taxation Years:

2017 and 2018

Hearing Event No.

703166

Legislative Authority:

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

Heard:

August 24, 2018 in Ottawa, Ontario

APPEARANCES:

Parties

Representative

Sanyogta Anand, Pavanveer Singh

Subhash Anand

MPAC

Jason Murree

City of Ottawa

No one appeared

DECISION OF THE BOARD DELIVERED BY SCOTT McANSH

1Sanyogta Anand and Pavanveer Singh (the “Taxpayers”) appeal the 2017 and 2018 assessed values of the property located at 4737 Milton Road in the City of Ottawa. The property is a 198 acre farm with a residence and was assessed at $1,261,000, with $1,201,200 in the farm property class and $59,800 in the residential property class. The Taxpayers assert that the property is worth approximately $500,000 because it is subject to Flood Plain Overlay in the City of Ottawa Zoning Bylaw.

2MPAC defends the assessment as returned to the roll. It argues that a Flood Plain Overlay does not impact the current use of the property, so cannot be said to have an impact on the likely sale value.

3For the reasons that follow, I find that the Flood Plain Overlay cannot impact the assessment of farmland. I also find that the property likely would have sold for $1,800,000 on January 1, 2016. However, other property in the vicinity is assessed at 91.82% of its current value, so it would also be fair to assess the Taxpayer’s property at 91.82% of its current value, or $1,652,760. But MPAC has not filed a notice of intention to seek a higher assessment, as required by Rule 40 of the Assessment Review Board’s (the “Board’s”) Rules of Practice and Procedure (the “Rules”). I therefore confirm the assessments for the 2017 and 2018 taxation year at $1,261,000, with $1,201,200 in the farm property class and $59,800 in the residential property class.

Legislation

4The Assessment Act, R. S. O. 1990. c. A. 31 (“Act”) requires that I determine two things in this appeal. First, s. 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, s. 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 in s. 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 that the land or buildings could be put to cannot be considered. Only the sales of farmland to farmers intent on farming the land can be considered.

Current Value

6The Taxpayers main argument is that the City of Ottawa Zoning Bylaw limits the development potential of the property and therefore limits its potential sale value. As noted above, non-farming uses that the land can be put to cannot be considered in valuing farmland. This means that if there were development potential, I could not consider that aspect of value. The Act is clear that only other farms sold for the purpose of farming can be used to value the property. The Taxpayers also admit that the Flood Plain Overlay has not limited the farming activity on the property. I therefore will not consider the Flood Plain Overlay in determining the value of the property.

7MPAC presented the sales of six farms in the same part of the City of Ottawa as the Taxpayers’ property. The relevant details of those sales are set out below:

Address

Lot size (acres)

Acres of Soil > Class 4

Acres of Soil < Class 3

Sale Date

Sale Price

4737 Milton Road

199.85

137.85

62

1

5936 Rockdale Road

147.03

141.5

5.53

Apr 2016

$2,805,011

2

Heuvelmands Road

89.67

80

9.67

Oct 2013

$1,000,000

3

6014-450-020-112100-0000

98.63

98.63

0

Jan 2015

$1,000,000

4

0614-500-201-129400-0000

99.23

49.61

49.62

Mar 2012

$1,659,000

5

0614-500-201-129500-0000

99.07

78.07

21

Mar 2012

$1,659,000

6

Dunning Road

99.66

99.66

0

May 2016

$1,176,000

8These sales indicate that the Taxpayers’ property likely would have sold for approximately $2,000,000 on January 1, 2016. The soil classification designations in the above table reflect the number of acres that can support cash crop production and those that are better suited to grazing. Classes 1, 2, and 3 are the best soils and differ in how productive the land is, but all support cash crop production. Classes 4, 5, and 6 are only suitable for gazing, and Class 6 may not even be suitable for that. Dividing the land into the acres that can produce cash crops and those that cannot is a useful metric for how the properties can be used.

9Sale 1 shows that the amount of productive land on the Taxpayers’ property sold for $2,805,011 very close to the valuation day. The land on Sale 1 is Class 1, while the Taxpayers’ property’s productive land is in Classes 2 and 3. That indicates that the Taxpayers’ property would have sold for slightly less than Sale 1. However, the Taxpayers’ property also has more potential grazing land, which would partially offset the lower soil classification of the productive land. I find that the Sale 1 indicates that the Taxpayers’ property likely would have sold for $2,500,000 on January 1, 2016.

10Sale 2 sold in 2013. It is difficult to draw conclusions about what a farm would have sold for on January 1, 2016 based on what a different farm sold for in 2013. That property is also significantly inferior to the Taxpayers’ property. The only conclusion that can be drawn from Sale 2 is that the Taxpayers’ property would have sold for more than $1,000,000 on January 1, 2016.

11Sale 3 is approximately half the size of the Taxpayers’ property. However, all of that land is productive, so the Taxpayers’ property would not likely have sold for twice as much, though it would have sold for close to that amount. Sale 3 indicates that the Taxpayers’ property likely would have sold for slightly less than $2,000,000 on January 1, 2016.

12Sales 4 and 5 sold in the same transaction and are adjacent to each other. They should therefore be considered as a 198.3 acre farm with 127.68 acres of productive land and 70.63 acres of grazing land that sold for $3,318,000. Those acreages are very similar to the Taxpayers’ property. Those sales indicate that the Taxpayers’ property likely would have sold for $3,000,000 on January 1, 2016. That is a cautious conclusion, however, because those sales took place in 2012, four years before the valuation day.

13Finally, Sale 6 is half the size of the Taxpayers’ property and has primarily Class 2 farmland. The Taxpayers’ property has an additional 38.19 acres of productive land and an additional 62 acres of grazing land. Sale 6 indicates that the Taxpayers’ property likely would have sold for more than $1,176,000 on January 1, 2016.

14The overall picture painted by these sales is that the Taxpayers’ property would likely have sold for $2,000,000 on January 1, 2016. Sales 1, 4, and 5 indicate a higher value, while Sale 3 indicates a slightly lower value. I am satisfied that the Taxpayers’ property would have sold for $2,000,000 on January 1, 2016, based on these sales.

15MPAC admits that none of these are subject to the Flood Plain Overlay, but explain that there were no sales of farms in the Overlay close to the January 1, 2016 valuation day. It takes the position that a Zoning Bylaw designation, such as the Flood Plain Overlay, would not impact the sale value of farmland because land in the Overlay can still be farmed.

16While I agree with MPAC that the Zoning Bylaw designation, in itself, is not likely to impact value, the Taxpayers’ property is still likely worth something less than the $2,000,000 indicated by the sales. Flooding impacts farming and the Overlay is a signal that the land is more prone to flooding. That could impact value. It is difficult to say how much that would impact value without any sales of farms impacted by the Overlay, but that impact should be accounted for in determining the likely sale value of the Taxpayers’ property.

17The Taxpayers’ evidence was that the property had flooded once in the 30 years they have owned it. That is something that potential purchasers could likely learn and it indicates that there would not likely be a significant discount for flooding. I estimate that a 10% reduction could account for the increased flood risk the Taxpayers’ property faces. I therefore find that the Taxpayers’ property likely would have sold for $1,800,000 on January 1, 2016. That is the current value of the property.

18The Taxpayers argued that a tax sale of an adjacent property 15 to 20 years ago suggests that land in the Overlay sells for less. The Taxpayers state that the property sold for approximately $50,000 in that tax sale. They entered the property PIN for that adjacent property, which does not indicate any tax sale. I put no weight on that tax sale. It is far too removed from the January 1, 2016 valuation day. Tax sales also do not involve a willing seller so are not generally appropriate comparisons for determining current value.

Equity

19The Act requires that I look at the assessment of similar land in the vicinity to determine if it would be fair and equitable to assess the Taxpayers’ property at its current value. MPAC presented a study of 30 properties that sold near the Taxpayers’ property between April 2012 and January 2018. MPAC’s argument is that the median level of appraisal of 0.943 indicates that property is being assessed near its current value so no equity adjustment is required. The Taxpayers did not present evidence on an equitable adjustment.

20This Board recently considered equity in Jay Patry Enterprises Inc. v Municipal Property Assessment Corporation, Region 05, 2019 CanLII 39629 (ON ARB), 2018 CanLII 70338 (ON ARB). In that case the Board held that a statistical analysis of sold properties is the best evidence of an inequity in assessment. The Board set out its views on statistics at paragraph 112:

First, means are the strongest and most reliable metric of central tendency in a data set. Means are also the only metric from which reliable error tolerances can be calculated. Those error ranges are important in determining if the true level of assessment of all similar property in the vicinity is below one hundred percent. We find that a 95% confidence interval is a reasonable error tolerance around a sample mean. Neither party provided those statistical metrics so we have calculated them ourselves when required.

21I agree with that assessment. I calculate the mean assessment in MPAC’s study to be 91.82%. MPAC provides a measure that it calls the coefficient of disruption, which in this case is 13.7. That is not a metric that is common to apply to statistical samples. It basically calculates the average variation of each sample from the median. I find that the standard deviation is a more common metric. It shows how wide the distribution of the sample is from the mean and can be used to calculate confidence intervals. I calculate the standard deviation to be 16.79%. Based on that standard deviation, I find the 95% confidence interval to vary by 6% from the mean. That means that there is a 95% chance that the true mean level of assessment of property in the vicinity is between 85.82% and 97.92%. The sample provided by MPAC indicates that it is highly likely that property in the vicinity is assessed slightly below its sale value.

22Given that property in the vicinity is assessed, on average, at 91.82% of its current value, it would also be fair to assess the Taxpayers’ property at a similar level of assessment. I calculate 91.82% of $1,800,000 to be $1,652,760. That is an equitable assessment for the Taxpayer’s property.

CONCLUSION

23The sales indicate that the Taxpayers’ property likely would have sold for $1,800,000 on January 1, 2016. The assessments of similar property in the vicinity show that, on average, property is assessed at 91.82% of its likely current value. It would therefore be equitable to also assess the Taxpayers’ property at 91.82% of its current value. An equitable assessment is therefore $1,652,760. However, MPAC has not served a notice of intention to seek a higher assessment, as required by Rule 40 of the Board’s Rules. Given that lack of procedural compliance, I will not increase the Taxpayers’ assessment. The Taxpayers’ assessment is therefore confirmed at 1,261,000, with $1,201,200 in the farm property class and $59,800 in the residential property class for the 2017 and 2018 taxation years.