Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 09, 2018 FILE NO.: WR 154801

Assessed Person(s): 578448 Ontario Limited Appellant(s): NDA Investments Limited Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 13 Respondent(s): City of Oshawa

Property Location(s): Coates Road East Municipality(ies): City of Oshawa Roll Number(s): 1813-070-006-52800-0000 Appeal Number(s): 3267965 and 3322464 (deemed 2018) Taxation Year(s): 2017 and deemed 2018 Hearing Event No.: 701688

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

Heard: July 20, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
NDA Investments Limited	Devon Biddle
MPAC	Carl Goodrich
City of Oshawa	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

Background

1NDA Investments Limited (the “Appellant”) is the owner of a vacant property identified only as Coates Road East (the “Subject Property”), which is an 18-acre parcel of vacant land in the Managed Forests Property Class. The Subject Property description is Con 9 Part Lot 9 and Road, with the civic address of 5281 Ritson Road North in Oshawa. It was acquired by the corporate owner for the purpose of simple personal enjoyment in owning a forested parcel. There was no plan for development.

2Pursuant to the provisions of the Assessment Act (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.

3MPAC has assessed the value of the Subject Property, as of January 1, 2016, at $100,000, in the Managed Forests property class.

4The Board must determine the value of the Subject Property on January 1, 2016, for the 2017 and 2018 taxation years (“current value”).

5The Appellant has filed appeals for taxation years 2017 and 2018 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is its position that MPAC’s assessment of current value is too high and that the correct current value is $82,500. At this hearing, MPAC takes the position that its opinion of value is much higher than the value returned, but asks the Board to confirm the returned value of $100,000.

6Pursuant to s. 40(11) of the Act, the City of Oshawa is a party to this proceeding. However, the City did not advise the Board of its position on the issues raised in these appeals. Craig McCullagh attended the hearing on behalf of the City as an observer only.

7Section 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. MPAC took the position that because this is classified as Managed Forest equity is not an issue. MPAC provided no evidence on this issue. The Appellant did not assert that an equitable reduction was required.

8At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value as of January 1, 2016, for the 2017 and 2018 tax years is $138,000. However, as no increase in the value was applied for, the Board confirms the assessed value of $100,000. An equitable reduction of this value is not required.

Relevant Legislation

9The Act states:

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.

Valuation days

19.2(1) 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.

40.(17) 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.

Sections of the Act and Regulations relating to Managed Forests

11In accordance with s. 44.(3)(a) of the Act, the first mandate of the Board is to determine “the current value of the land.” The Subject Property is classified as Managed Forest Lands. The following legislation applies to the valuation of this property class for 2017 and subsequent years.

12Section 19.(5.2) provides:

Conservation lands, managed forest.– The current value of land that is conservation land as defined in the regulations or land in the managed forests property class shall be based only on the current use of the land and not other uses to which the land could be put.

13Section 19.(5.2.1) provides:

Current Value of Managed Forests.– Despite subsection (5.2) and any other provision of this Act, the Minister may, by regulation, provide that the current value of land in the managed forests property class shall be determined in accordance with the regulations.

14Section 32.1(1) of the Ontario Regulation O. Reg. 282/98 (“O. Reg. 282/98”), as amended, states:

32.1 (1) The current value of land in the managed forests property class shall be determined as follows for the 2017 and subsequent taxation years:

1. Determine the value of the land in accordance with subsection 19 (5.2) of the Act.

2. Determine the value of the land in accordance with subsection (2).

3. If the value determined under paragraph 1 is less than the value determined under paragraph 2, the current value of the land is the value determined under paragraph 1.

4. If the value determined under paragraph 2 is less than 31 per cent of the value determined under paragraph 1, the current value of the land is the amount calculated by multiplying the value determined under paragraph 1 by 0.31.

5. In any other case, the current value of the land is the value determined under paragraph 2.

32.1(2) For the purposes of paragraph 2 of subsection (1), the value of the land is determined as follows:

1. Determine whether the geographic area in which the land is located is listed in Column 2 of Table 1 to Part IX.1 of this Regulation. If it is, take the step described in paragraph 2. If it is not, take the steps described in paragraphs 4 and 5.

2. If the geographic area is listed in Column 2 of Table 1, determine whether the land band for the land, as assigned by the assessment corporation, is listed in Column 3 of Table 1 for the applicable geographic area. If it is, take the steps described in paragraphs 3 and 5. If it is not, take the steps described in paragraphs 4 and 5.

3. For land located in a geographic area listed in Column 2 of Table 1 and assigned to a land band listed in Column 3 of Table 1, identify the applicable value per acre of the land as set out in Column 4 of Table 1.

4. For any other land, identify the applicable value per acre of the land as set out in Column 2 of Table 2 to Part IX.1 of this Regulation using the land band assigned to the land by the assessment corporation.

5. The value of the land is calculated by multiplying the applicable value per acre of the land by the acreage. O. Reg. 656/05, s. 1; O. Reg. 101/09, s. 1.

Discussion, Analysis and Findings

Issue No. 1: What is the correct current value of the Subject Property for the taxation years 2017 and 2018?

MPAC’S Evidence

15Carl Goodrich, a Property Valuation Analyst for MPAC, represented MPAC and gave the evidence for MPAC. He submitted his Valuation Report, dated March 28, 2018, and his Equity Analysis Report.

16Mr. Goodrich noted that the entire parcel of land that is the Subject Property is in the Managed Forests Property Class. He first determined the likely sale value, as required by the Act and the Regulation, based on comparison of the Subject Property with similar properties in the vicinity. Mr. Goodrich chose six vacant properties in the vicinity, all but one of which was classified as Vacant Residential Land Not on Water. The one exception to this was Property 5 at 125 Townline Road West. This property was classified as Vacant Residential/Commercial/Industrial Land Owned by a Non-farmer with a Portion Being Farmed. The parcels all sold between June 2012 and September 2016.

17The following chart sets out the addresses of the properties being compared, the months of their sales, the amounts for which they were sold, the number of acres and sale price per acre. Note that none of the parcels are improved by buildings, and only the Subject Property has an “Abuts Railway” variable noted.

Property	Sale Date	Size of Parcel (Acres)	Sale Price	Price per Acre
Subject Property		18
1. 6582 Enfield Road	September 2013	10	$290,000	$29,000
2. 35 Coates Road West	June 2012	1.71	$185,000	$108,187
3. 350 Brawley Road West	January 2013	24.93	$599,000	$24,027
4. 15 Calistoga Drive	May 2016	2	$590,000	$295,000
5. 125 Townline Road West	August 2014	26.83	$430,000	$16,026
6. 7375 Cedarbrook Trail	September 2016	10.03	$302,000	$30,109

12Mr. Goodrich then rejected Properties 2 and 4 because they were substantially smaller than the Subject Property and the other proposed comparable properties. He calculated the average price per acre of the other four properties which is $24,790. He then multiplied this by the acreage of the Subject Property to determine the likely sale value of $446,000.

13Mr. Goodrich then referred to the Regulation to discuss the legislative requirements for calculating the current value of managed forest property once the likely sale value of the land has been established. The Regulation sets out the calculation, which Mr. Goodrich summarized and which will be explained in more detail below. He calculated that the value of the 18-acre parcel using the regulated rate as per Table 1 of $4,581 per acre was $82,458. The Regulation requires that he also calculate 31% of the likely sale value, which is $138,260. Mr. Goodrich’s evidence was that if 31% of the likely sale value was greater than the regulated rate, then the current value is 31% of the likely sale value.

14However, Mr. Goodrich also testified that the original estimate of value of the Subject Property for the 2017 taxation year was $325,000. 31% of this value is $100,750, which Mr. Goodrich rounded down to $100,000. Because this value is greater than the regulated value ($82,458), the Regulation states that this value is to be used.

15Lastly, Mr. Goodrich took the position that the issue of equity is not relevant in managed forest cases because the current value is already significantly reduced by the operation of the Regulation.

MPAC’s Submissions

16Mr. Goodrich submitted that the likely sale value determined by direct sales comparison was $446,000. Applying the Regulation to this amount resulted in a current value of $138,260. However, because the assessment was returned at a lower amount than this, Mr. Goodrich asks that we confirm the returned amount of $100,000.

Appellant’s Evidence

17Devon Biddle represented the corporate Appellant, and testified on its behalf. He filed a letter dated April 2, 2018, which contained a summary of the facts and opinions on which the appeal is based.

18Mr. Biddle testified that the civic address for the land is 5281 Ritson Road North, Oshawa. The Subject Property has been used by the corporation for Managed Forest purposes only, and they have harvested some wood from the Subject Property and also planted white pine and a mix of hardwood species. The Subject Property is unsuited to most types of development because it has the same physical geography as the Oak Ridge Moraine, located approximately four kilometres away. The southern limit of the parcel is bounded by the Canadian National Pacific rail line. Because the topography and make-up of the parcel have been affected by glacial activity, it is rolling land with steep sections, making it not valuable for future development. Ritson Road North, which provides the western boundary for the Subject Property, is at that point an unimproved road and inaccessible.

19Mr. Biddle provided a list of nine similar properties in the vicinity, and set out the assessed values for those lands as gleaned from MPAC’s “About My Property” website. However, none of the nine properties had been sold, so it was not sales evidence that could be used. The properties ranged in assessed value from $2,020 per acre to $6,059 per acre.

20Mr. Biddle stated that he was unfamiliar with the regulated managed forest rates as contained in O. Reg. 282/98, and testified that the rough terrain of his property, including deep ravines, should be reflected in the value.

21Mr. Biddle was asked about the possibility of building on the parcel and responded that it would be a difficult and much-regulated process. The difficulty comes from the fact that the entry would have to come from Coates Road East because Ritson Road North is unimproved. Mr. Biddle, a civil engineer himself, believes there would be an environmental assessment study required before a permit would issue, and that the types of building on the Subject Property would be severely limited (excluding barns, sheds and other outbuildings). It would be an expensive process given the restrictions running with the land.

Appellant’s Submissions

22Relying on his evidence, the Appellant submits that the correct current value for taxation year 2017 is $82,500, which is the regulated rate for this area per acre multiplied by the number of acres in the parcel. Mr. Biddle made no representations on the issue of equity.

Findings

23The valuation of Managed Forests is specifically addressed in the Act and the Regulation. The purpose of the special valuation is to assess Managed Forests only in respect of their current use, and to provide a lower value using the regulated value, which serves as an incentive to the people of Ontario who own tracts of forested land to leave it in its forested condition.

24MPAC’S approach in this case was correct. O. Reg. 282/98, as amended, requires that two values be determined in order to determine the current value of a Managed Forests property. First, the Board must decide what the property likely would have sold for based on its current use, and without reference to uses the land might be put to in the future. This is the sale value of the property. Second, the Board must determine the regulated value, in accordance with s. 32.1(2). This is the regulated value. Here, the specified rate per acre is $4,581 for this geographic area, which results in a regulated value of $82,458 for the 18-acre parcel.

25The Regulation then states that, if the sale value is less than the regulated value, the current value is the sale value of the Subject Property. If the regulated value is less than 31% of the sale value then the current value is 31% of the sale value. Finally, if neither of those situations applies then the current value is the regulated value.

26Applying the Regulation to the facts of this case, I must first determine the likely sales value. In this case MPAC has provided evidence of an initial estimated sale value of $325,000. Then, following the comparison of this property to the proposed comparable properties, MPAC determined that the sale value would likely be $446,000. While this value is supportable based on the other properties chosen by MPAC, the evidence provided by both parties about the steep and varied topography of the Subject Property, its inaccessibility via Ritson Road due to this section of road being an unimproved road, and the strict limitations put on the property due to its proximity to the Oak Ridge Moraine make it clear that this land is unsuited to other uses. However, neither party provided any evidence of the effect on value these negative features would have. Based on the evidence before the Board, the likely sales value would be $446,000. After determining the likely sale value, the Regulation requires that I calculate 31% of this value which is 0.31 x $446,000 which gives a current value of $138, 260. As noted above the regulated rate is $82,458 or $82,500 rounded.

2731% of the likely sale value is $138,260, which is higher than the regulated value of $82,500. The regulation therefore states that the current value is 31% of the sale value which is $138,260, which can be rounded to $138,000.

29Notwithstanding this amount, the assessment was returned in the amount of $100,000.

DECISION

28The correct “sales value” for the property prior to the application of the Regulation is $446,000. Once the requirements of the Regulation are applied, the current value of this managed forest land is determined to be $138,260. As MPAC did not apply for an increase in the assessed value of the Subject Property, the Board confirms the assessed value in the amount of $100,000.

29Because neither party provided evidence relating to equity, an equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.