Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 08, 2018

FILE NO.: WR 154845

Assessed Person(s): Lauren Angela Goettler; Vaughn Charles Goettler

Appellant(s): Lauren Goettler; Vaughn Goettler

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 18

Respondent(s): Town of Niagara-on-the-Lake

Property Location(s): 289 Ricardo Street

Municipality(ies): Town of Niagara-on-the-Lake

Roll Number(s): 2627-010-001-06300-0000

Appeal Number(s): 3269885, 3272373 and 3309280

Taxation Year(s): 2017 and 2018

Hearing Event No.: 701068

Legislative Authority: Section 40 and 34 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: July 24, 2018 in Virgil, Ontario

APPEARANCES:

Parties	Representative
Lauren Angela Goettler; Vaughn Charles Goettler	Self-represented
MPAC	George Kaldenbach Peter Benner
Town of Niagara-on-the-Lake	No one appeared

DECISION OF THE BOARD DELIVERED BY ANTHONY LaREGINA

BACKGROUND

1The subject property is a single-family two-storey detached Tudor style dwelling located on water at 289 Riccardo Street (“subject property”) in the Town of Niagara-on-the-Lake. The home was built in 1908 with a total building area of 3,194 square feet (“sq. ft.”) which includes 1,705 sq. ft. on the first floor, 1,225 sq. ft. on the second floor and 1,225 sq. ft. in the basement of finished space to average condition. The subject property also has a detached garage, stone wall entrances, and a privacy gate. The lot has 107.87 feet of effective frontage and 173.64 feet of effective depth resulting in an effective site area of 0.43 Acres and backs onto the Niagara River very near to Lake Ontario. The quality of construction for the home is 8.5. For the 2017 taxation year, the current value assessment was returned at $1,857,000 appealed under s. 40 for the main residence and $27,000 for the construction of the pool appealed under s. 34. For 2018 the property was returned at a combined current value of $1,884,000 which is the total including the value of the pool.

2Peter Benner, the assessor from MPAC, provided the Assessment Review Board (“Board”) with an estimate of current value at $1,850,000 based on the sale of the subject property which occurred in October 30, 2015. As a result of inspecting the property he reduced the quality from 8.5 to 8.0 based on the condition of the structure and the lack of heating therefore recommending a downward adjustment to Current Value by $100,000 to $1,750,000. Mr. Benner also presented an equity study with a 0.876 median Assessment to Sales Ratio (“ASR”) making a further equity adjustment of 12.4%. Mr. Kaldenbach, MPAC’s representative, therefore recommends that the returned assessment of $1,884,000 for the 2018 tax year and $1,857,000 for the 2017 tax year be reduced to $1,533,000 without the pool and $1,557,000 with the pool.

3Ms. Lauren Goettler, the Appellant, is requesting a reduction in the returned assessment for both years to $1,100,000. Ms. Goettler submitted that they were naive and had no understanding of the market in Niagara-on-the-Lake and therefore overpaid for the home. Ms. Goettler pointed out that they made many repairs to the property after they took possession well into 2018 in order that the property was livable. Ms. Goettler argues that the home had no heat when they purchased it and the vendor gave them a $100,000 reduction in price towards repairs as an incentive to close the deal. Ms. Goettler does not agree with the quality of construction of 8.5 indicating that the property was in disrepair and the quality should be substantially lower.

4In addition to the 2017 taxation year appeal filed by Ms. Goettler, there is a 2018 taxation year appeal before me. This is because, pursuant to s. 44.(26) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”), a 2018 appeal is deemed to have been filed if the 2017 taxation year appeal was “not finally disposed of before March 31,” 2018.

ISSUES

5The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 and 2018 taxation years?

ii.) Is the current value as determined by the Board equitable with the assessments of similar lands in the vicinity?

DECISION

6The Board finds the current value of the subject property for the 2017 taxation year is $1,750,000 and for the 2018 taxation year to be $1,777,000.

7The Board determines that the current value requires a further adjustment of 12.4% to $1,533,000 for the 2017 tax year and $1,557,000 for the 2018 tax year in order to make the assessment of subject property equitable with the assessments of similar lands in the vicinity.

8The Board therefore reduces the assessment of the subject property from $1,884,000 to $1,557,000 for the 2018 tax year and from $1,857,000 to $1,533,000 for the 2017 taxation year. The Board will reduce the 2017 Section 34 appeal from $27,000 to 0 as the pool did not exist in the 2017 tax year. The value for the pool is included in the 2018 assessment of $1,557,000.

REASONS FOR DECISION

Evidence and Analysis

Current Value

9In accordance with s. 44.(3)(a) of the Act, the first mandate of the Board is to determine “the current value of the land.” Section 1 of the Act defines current value as “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.”

10For the 2017 taxation year, the Board must determine what the subject property would have sold for in an arm’s length transaction on the January 1, 2016 valuation day set by s. 19.2(1) of the Act.

MPAC’s Position

11Mr. Benner introduced the sale of five comparable properties all located on water as well as the sale of the subject property. The sales are all located in the vicinity of the subject property but, according to Mr. Benner, four of five sales were inferior to the subject property and one sale was superior. They were much newer and all but one had quality levels that were for the most part inferior to the subject property. The data representing the five properties are displayed below:

	Subject Property	Sale 1	Sale 2	Sale 3	Sale 4	Sale 5	Sale 6
Address	289 Ricardo Street	289 Ricardo Street	293 Ricardo Street	34 Firelane 7	26 Fireland 11A	14639 Niagara River Parkway	14621 Niagara River Parkway
Current Value Assessment ("CVA") $	1,884,000	1,884,000	4,315,000	1,103,000	839,000	1,104,000	1,383,000
Sale Value $		1,850,000	4,150,000	1,175,000	1,125,000	1,165,000	760,000
Time Adjusted Sale ("TAS") $		1,910,311	4,027,128	1,222,558	1,039,086	1,223,139	824,547
Sale Date		10/30/2015	03/10/2016	08/31/2015	06/20/2016	08/27/2015	05/11/2015
Year Built	1908	1908	2011	1986	2006	1989	1970
Quality	8.5	8.5	10	6.5	7.5	7.5	7.5
Building Area sq. ft.	3,194	3,194	5,312	2,853	2,563	2,746	3,602
Site Area acres	0.43	0.43	0.31	1.0	0.23	0.50	.12
Abuts Variable	On water	On water	On water	On water	On water	On water	On water
TASP/S.F. $
MPAC Rating			Inferior	Relatively Comparable	Inferior	Inferior	Inferior

12Mr. Benner explains that the best comparable to establish the current value of the subject property is the sale of the subject property which occurred on October 30, 2015. Mr. Benner recommends using the unadjusted sale value of $1,850,000 to establish the current value as the sale date is very close to the valuation day of January 1, 2016.

13Mr. Benner conducted an inspection of the subject property and found that portions of the stone facade were falling, there was no heat in the home, the exterior wood required repair, and the home only had 4 bedrooms instead of 5. Based on the findings of the inspection Mr. Benner recommends that a downward adjustment of $100,000 is warranted on the current value of the subject property to $1,750,000.

14Mr. Benner acknowledged that there was a bidding war on the property and based on the condition of the home he can understand how the appellant may feel they paid a higher price than the market value.

15Mr. Kaldenbach submits that based on the sale of the subject property of $1,850,000 and the $100,000 adjustment for quality of construction and condition he recommends that the Board find the current value of the subject property to be $1,750,000 for the 2017 tax year and $1,775,000 for the 2018 tax year which also includes the value of the pool which was completed and operational in 2018.

Appellant’s Position

16Ms. Goettler clearly states that their appeal is based on the condition of the property and their lack of knowledge of the local real-estate market therefore claiming that they overpaid for the home.

17Ms. Goettler argued that their home had no heat and required the installation of two furnaces, installation of new windows, repair of stones falling from the facade of the structure, and the repair of exterior wood on the home. Ms. Goettler submitted that the old owner neglected the home for seven years resulting in the poor condition of the property. Ms. Goettler submitted that the vendor agreed to reduce the price by $100,000 from $1,850,000 to $1,750,000, for repairs to the home, as an incentive to close the deal.

18After they purchased the home, the Goettlers installed two new furnaces as well as new windows. They also found that the shoreline was eroding into the river and therefore purchased the shoreline for $35,000 and built a retaining wall and pool at a cost of $250,000, most of which was the cost of the retaining wall. Mr. Benner estimates that the value of the pool built in 2018 is $27,000.

19Ms. Goettler argues that the subject property is inferior to Sale # 3, 34 Firelane 7, built in 1986, as compared to the subject property built in 1908, and renovated in 1970. Sale 3 also has a larger frontage and lot size as compared to the subject property. Based on the adjusted sale value of 34 Firelane 7 of $1,222,558, Ms. Goettler submits that their home should be worth less based on the fact that it is inferior. Ms. Goettler estimates that the current value assessment of the subject property should be no more than $1,100,000.

Analysis of Current Value

20The Board accepts the sale of the subject property which occurred on October 30, 2015 as the best evidence in support of the current value. Based on the fact that this sale was so close to the valuation day of January 1, 2016 the board will make no time adjustments to the revised sale value of $1,750,000.

21It is clear that the subject property is a very desirable unique property with lots of history. Based on MPAC’s evidence there were other parties interested in buying the property which further supports that the sale was an open market sale between a willing buyer and willing seller agreeing on a fair price acceptable to both parties.

22It is also clear from the evidence that between the time the Agreement of Purchase and Sale was executed and the closing of the deal Mr. and Mrs. Goettler became aware of the condition of the property. Furthermore as an incentive to close the deal the purchaser and vendor agreed to a $100,000 reduction so that the Goettlers could repair the deficiencies. Therefore the true purchase price reflecting the final agreed to value between the parties was $1,750,000 and not the original $1,850,000.

23In addition MPAC’s inspection also resulted in the same $100,000 reduction in value attributed to both the reduced quality of construction and condition of the property further supporting the $1,750,000 adjusted purchase price.

24The Board therefore finds that the current value of the subject property is $1,750,000 for the 2017 tax year and $1,777,000 for the 2018 tax year which includes the $27,000 value estimated by MPAC for the pool addition.

25The Board is in agreement with MPAC that the other five properties are not comparable to the uniqueness of the subject property and therefore would not be suitable for the purposes of establishing the current value of the subject property. The sale of the subject property is always the best evidence, especially in this case as the subject property is really a one of a kind unique property in a very desirable location in Niagara-on-the-Lake.

Board’s Analysis of Equity

26Section 44.(3)(b) directs that, after determining current value, the Board shall 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.”

27The ASR of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed below its current value. If any other property is assessed below its current value, a reduction in the assessment below current value is required to make the assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the time adjusted sale price.

28Mr. Benner presented an equity analysis of 30 property sales of code 313 single-family detached homes on water that occurred from January 1, 2014 to January 1, 2018, all located within 20 kilometres of the subject property, resulting in a median ASR of 0.876. Mr. Kaldenbach submits that MPAC’s standards indicate that for residential property, the median ASR should fall between 0.95 and 1.05. If the median ratio falls within this range, this reveals that the current value assessments are reflective of sales prices in the vicinity and therefore no further adjustment is required. In this case the median ASR falls below the range at 0.876 therefore Mr. Kaldenbach has recommended a downward adjustment off 12.4% to the current value.

29Ms. Goettler provided no evidence in support of an equity argument.

30The best evidence in relation to equity is the sale and assessment evidence of 30 properties presented by MPAC indicating a median ASR of 0.876. Based on MPAC’s equity study, the Board finds that a downward adjustment of 12.4% should be made to current value in order to ensure the assessment is equitable with the assessment of other property in the vicinity. The Board will adjust the current value assessment from $1,750,000 to $1,533,000 for the 2017 taxation year and from $1,777,000 to $1,556,652 rounded to $1,557,000.

CONCLUSION

31The Board reduces the assessment of the subject property from $1,857,000 to $1,533,000 for the 2017 taxation year and from $1,884,000 to $1,557,000 for the 2018 year which includes the value of the pool. The Board reduces the 2017 Section 34 appeal from $27,000 to 0 because the pool did not exist in 2017.