Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 13, 2018

FILE NO.: WR 153792

Assessed Person(s): Alan Hershel Young; Lana Marion Lang

Appellant(s): Alan Young; Lana Lang

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 32

Respondent(s): Township of Neebing

Property Location(s): 90 Griffis Road

Municipality(ies): Township of Neebing

Roll Number(s): 5801-760-000-10500-0000

Appeal Number(s): 3224059 and 3315226

Taxation Year(s): 2017 and 2018

Hearing Event No.: 700769

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

Heard: June 5, 2018, in Neebing, Ontario

APPEARANCES:

Parties	Representative
Alan Young	Self-represented
MPAC	Kathleen Silen
Township of Neebing	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

BACKGROUND

1Alan Hershel Young and Lana Marion Lang (the “Appellants”) are the owners of 90 Griffis Road in Neebing Township (the “Subject Property”), which is a seasonal recreational home on Oliver Lake outside of the City of Thunder Bay.

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. MPAC has assessed the current value of the Subject Property at $246,000. The property is in the residential property class.

3The Appellants filed appeals for taxation years 2017 and 2018 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is their position that MPAC’s assessment of current value is too high and that the correct current value is $190,000. At this hearing, MPAC takes the position that its assessed value should be reduced to $221,000.

4Pursuant to s. 40(11) of the Act, the City of Thunder Bay is a party to this proceeding. However, the City did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the City’s behalf.

5Section 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 of the municipal tax burden according to the value of the property possessed by each ratepayer. MPAC 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.

6At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value for 2017 and 2018 tax years is $192,000. An equitable reduction of this value is not required.

RELEVANT LEGISLATION

7Relevant 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.

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.

ISSUES

8The issue to be determined on this appeal is the correct current value of the Subject Property for the taxation years 2017 and 2018.

Discussion, Analysis and Findings

MPAC’s Evidence

9Kathleen Silen represented MPAC. She is a Property Valuation Analyst with MPAC, and prepared the Valuation Report and Equity Analysis Report upon which she relied in her testimony, dated December 14, 2017. Ms. Silen began by advising that the assessment of the Subject Property had been returned at $246,000 for 2017 and $221,000 for 2018. Ms. Silen described the property as being located in a community having a variety of homes ranging in value from $133,000 to over $600,000. She visited the Subject Property in December, 2016.

10Ms. Silen chose six properties in the area which had sold before or after the valuation day, which is January 1, 2016. She explained that she was trying to establish value by comparing the Subject Property to similar properties in the area. She gave evidence on the means she used to adjust for the sales values, indicating that she needs to adjust the sales amounts to make them current for January 1, 2016. Ms. Silen carried out a sales ratio trend analysis using 240 sales of improved lands from the Subject Property’s neighbourhood, and used the results of that study to establish time adjustment factors which would allow her to bring sales prices into line with the valuation day. The Appellants did not object to the use of time adjustment factors.

11Three of the comparable residential sales proposed by MPAC were considered by MPAC to be similar to the Subject Property. Two others were considered inferior and one property was considered to be superior to the Subject Property. Ms. Silen gave evidence that no two seasonal/residential properties are the same, but some characteristics of one might serve as a trade-off for other characteristics in a second. For example, 650 Cloud Lake Road, MPAC’s Sale 1, was a smaller residence but one with a higher construction rating than the Subject Property. It lacked a bathroom and septic bed (using a holding tank for waste), but, unlike the Subject Property, had a newer detached garage. MPAC determined that the positive features of this residence could be set off against positive but different features of the Subject Property such as larger size and newer construction. In this example, the 650 Cloud Lake cottage sold in June, 2014 for the time-adjusted price of $223,000, or $2,000 more than MPAC’s recommended current value for the Subject Property.

12MPAC’s other two most similar property sales were actually the same cottage located at 804 Cloud Lake Road. The first sale occurred in 2013 for $189,900. The second occurred in 2016 for $252,000. No evidence was available with respect to changes in the property to cause the increase in value. Generally, this home is ten years newer than the Subject Property, with the same number of bathrooms and is 35 square feet (“sq. ft.”) smaller than the subject property. Because of its age (built in 1971) it would most likely be more valuable than the subject property, which is in fact the case here.

13The other three examples of cottage properties sold in the vicinity were used to narrow the range of value according to Ms. Silen. For example, 850 Cloud Lake Road sold for $171,751 (time adjusted) in 2016. This property lacks a septic system or heating and is smaller than the Subject Property. 211C South Bay Road sold for $212,467 (time-adjusted) in 2012, and this is a property with no bathroom, no septic system, and with a lower quality construction The third property, 181E South Bay Road, deemed superior to the subject property by MPAC, sold for $381,000 in 2012. This cottage is 38% larger than the subject property, with a septic bed and electric baseboard heat.

MPAC’s Submissions

14The last three proposed comparable properties provide examples of properties that are either less valuable or more valuable than the subject property. This allows MPAC to estimate the current value of the subject property. The technique is called “bracketing” and is useful in the direct sales comparison method of assessment. Relying on its evidence, MPAC’s submits that the correct current value for the subject property is $221,000 for January 1, 2016.

Appellant’s Evidence

15The Appellants were represented by Alan Young, one of the Appellants. His main argument against the current value proposed by MPAC is that his property has the smallest waterfront of the proposed comparable sales under consideration. His waterfront measures 62.22 feet, while the comparable properties have waterfronts ranging in size from 81 feet (181E South Bay Road – a property found by MPAC to be superior to the Appellant’s property) to 118 feet (804 Cloud Lake Road). The Appellant testified that it was his view that waterfront was a key factor in valuing property classified as seasonal/recreational first tier on water. His waterfront is significantly smaller than all the other comparable properties.

16The Appellant also spoke about the fact that this property size is smaller than many of MPAC’s proposed comparable property sales. 804 Cloud Lake Road, for example, has double the lake frontage and the lot is also approximately twice the size of his lot. 650 Cloud Lake Road, another proposed comparable sale, has double the frontage on the lake than the subject property, and 30% more site area. Given these differences, the Appellant argued that this property should be assessed 10 to 15 per cent less than any of the comparable properties proposed.

17The Appellant also compared the increase in the value of his property with the increases seen in neighbouring properties and determined that his assessment increased proportionally more than his neighbours’ had since the last assessment cycle.

Appellant’s Submissions

18The Appellants submitted that the correct value of the Subject Property on the valuation day for the 2017 taxation year was over-stated by MPAC by about $30,000. While the property did have some features which were superior to MPAC’s proposed comparable sales, it also has smaller lake frontage and a much smaller lot than some of the samples. The Appellants are seeking a reduction in his current value to $190,000, which they consider fair.

Findings on Current Value

19The current value of the subject property as proposed by MPAC in the amount of $221,000 for both 2017 and 2018 would appear to be an average of the time-adjusted sale prices of MPAC’s three proposed most similar comparable homes. Despite MPAC’s assertion that the various features of the three proposed comparable property sales balance out or have ”trade-offs”, it is clear that the subject property has:

• A smaller lot;

• No outbuildings such as a detached garage or a sauna, which the others have;

• Significantly less waterfront (almost 50% less waterfront than 804 Cloud Lake Road); and

• A much older building than all of MPAC’s comparable sales, with the exception of 650 Cloud Lake Road.

20It is difficult to see how the overall value of the various positive features of the Subject Property (septic and hydro for example) makes it as valuable as 650 Cloud Lake Road or 804 Cloud Lake Road. For example, 804 Cloud Lake Road has an effective age of 10 years newer than the Subject Property, a private well along with a septic bed and an outbuilding described as a Sauna/Pool House/Cabana. It also has almost the same size residence and almost double the waterfront of the Subject Property. Its 2016 time-adjusted selling price was $252,530. The Subject Property’s current value is less than that amount.

21It appears that MPAC has given the Subject Property the average of the sale prices of the three property sales it claims are most comparable: 650 Cloud Lake Road, 804 Cloud Lake Road, and 211C South Bay Road. $221,899 is the average of those three time-adjusted sales. Despite the fact that the Subject Property has a septic system and a very minimally larger structure, the Appellant raises a valid point that the small waterfront and smaller site area are the main features that will affect current value I do not find that the average of these three proposed comparable sales results in a reasonable value for the Subject Property.

22I find that MPAC’s proposed comparable sales, 850 Cloud Lake Road and 211 C South Bay Road, are the most comparable to the Subject Property. While the Subject Property has more amenities, such as septic system and baseboard heating, these other two properties have larger waterfronts and larger site areas. The Board finds that the correct current value for the subject property would therefore be an average of the time adjusted sale value of those two properties, which is $192,109, or $192,000 rounded.

DECISION

23The correct current value of the Subject Property is $192,000 for the 2017 and 2018 taxation years. The assessment for the subject property for 2017 is hereby reduced from $246,000 to $192,000. The assessment for the subject property for 2018 is hereby reduced from $221,000 to $192,000.

24An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.