Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 14, 2018

FILE NO.: WR 155948

Assessed Person(s): Nelson Stewart Taddeo

Appellant(s): Nelson Stewart Taddeo

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

Respondent(s): Township of Ignace

Property Location(s): 505 Main Street

Municipality(ies): Township of Ignace

Roll Number(s): 6001-000-001-41600-0000

Appeal Number(s): 3260255 and 3315124

Taxation Year(s): 2017 and 2018

Hearing Event No.: 702880

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

Heard: September 26, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Nelson Stewart Taddeo	Self-represented
MPAC	Carlene Steiner
Township of Ignace	No one appeared

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

INTRODUCTION

1Nelson Stewart Taddeo (the “Appellant”) is the owner of a one-storey single family detached residential property located at 505 Main Street (the “Subject Property”) in the Township of Ignace. The dwelling has 839 square feet (“sq. ft.”) of total building area and built in 1951. It has an effective year of build of 1957 and MPAC has assigned it a quality of construction rating of 5.0. There is also an outbuilding that MPAC refers to as a pre-engineered industrial building. It is located on a 0.41 acre lot. The Subject Property is accessed via a neighbouring property that is also owned by the Appellant.

2MPAC returned the assessment for the Subject Property at $79,000 for the 2017 and 2018 taxation years.

3Mr. Taddeo has appealed the assessment for the 2017 and 2018 taxation years to the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). He takes the position that the assessment as returned for the Subject Property is too high. He is of the opinion that the Subject Property may have a current value of $60,000. He asserts that MPAC has not taken into account that the Subject Property has no direct access to Highway 17 or that there is no independent connection to municipal water and sewer services.

4Pursuant to the Act, the burden of proof as to the correctness of the current value of the Subject Property rests with MPAC. For the period of 2017-2020, the Subject Property is valued as of January 1, 2016. MPAC’s representative, Carlene Steiner, estimates the current value of the Subject Property as of January 1, 2016 to be $73,000, based on an inspection and the direct comparison approach.

5Ms. Steiner conducted an equity study and determined that an equity adjustment is not warranted. She concludes that the assessment should be reduced from $79,000 to $73,000 for the 2017 and 2018 taxation years.

6Mr. Taddeo did not take a position on whether the Subject Property is inequitably assessed in relation to similar properties. However, he takes the position that the Subject Property’s assessed value should remain at the 2012 assessed value of $63,000.

ISSUES

7The issues to be determined on this appeal are:

a) What is the correct current value of the Subject Property as of the January 1, 2016 valuation date; and

b) Whether there should be an equitable reduction of the current value as determined by the Board and, if so, what should the amount of this reduction be.

DECISION

8The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date has not been proven. The Board therefore sets the assessment at its last uncontested value of $63,000.

9Therefore, the assessment of the Subject Property located at 505 Main Street is reduced from $79,000 to $63,000 for the 2017 and 2018 taxation years.

Relevant Legislation

10Section 1 of the Act states:

“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.

11Section 19.(1) of the Act states:

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

12Section 19.2(1) of the Act states:

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.

13Section 40.(17) of the Act states:

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.

14Section 44.(3) of the Act states:

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.

Analysis and Findings

What is the correct current value of the Subject Property as of the January 1, 2016 valuation date?

MPAC’S Evidence and Submissions

15Ms. Steiner states that she inspected the Subject Property on March 5, 2018. As a result of the inspection, she applied a negative 31% adjustment at the structural level to the dwelling as she determined that it is in need of some upgrades. She states that the dwelling itself is a solid home. The dwelling was originally assessed at $39,549 and then at $27,289 following the adjustment.

16Ms. Steiner states that the pre-engineered metal building is valued based on the cost method and is assessed at $36,758. It was originally built in 1971 and is a pretty substantial building that is big enough to store equipment. She is of the opinion that an assessed value of $36,000 (rounded) is fair value. As a result of the inspection, its assessed value increased from $30,233 to $36,758 even though she applied 64% depreciation to each of the building’s components. She states that Mr. Taddeo has advised that it is used for his personal use and not for commercial purposes as part of his adjoining business.

17Ms. Steiner states that there is a negative adjustment built into the model to account for electric heat (negative $629).

18Ms. Steiner states that she did not take the access issue or the water and sewer issue into account. In her opinion, these are not issues. There is no separate driveway to the Subject Property. However, Mr. Taddeo has a right of access via an adjacent property that he also owns. There is a water and sewer line that runs from an adjoining property to the Subject Property and this was done to alleviate the cost to the owner.

19Ms. Steiner relies on a “Valuation Report” of the Subject Property prepared on May 1, 2018. Key property details for the four proposed comparable properties are set out below in Table A. One property had two sales (Sales 3 and 5). All properties lack a large pre-engineered metal building like the Subject Property. All sales have been time adjusted to the January 1, 2016 valuation date.

Table A

Property	Year Built (Effective Year)	Quality	Building Area (sq. ft.)	Site Area (ac.)	Other	Sale (Time Adjusted Sale “TAS”) ($)
505 Main Street (Subject Property)	1951 (1957)	5.0	839	0.41	-Electric heat -Commercial/industrial -Abuts commercial	N/A
612 Pine Street (Sale 1)	1962	4.5	785	0.96	-Shed	20,000 (19,762) (11/2016)
307 Pine Street (Sale 2)	1952 (1975)	5.0	741	0.44	-Detached garage -Shed	45,000 (45,768) (04/2013)
309 Main Street (Sale 3)	1946	5.0	698	0.12	-Electric heat	18,000 (18,105) (06/2015)
304 Front Street (Sale 4)	1952 (1965)	4.5	823	0.11	-Attached garage	27,000 (27,439) (10/2013)
309 Main Street (Sale 5)	1946	5.0	698	0.12	-Electric heat	25,000 (24,033) (04/2018)

20Ms. Steiner states that she considers the property at 307 Pine Street (Sale 2) as relatively comparable to the Subject Property. However, it has a detached garage and shed whereas the Subject Property has a pre-engineered metal structure.

21Ms. Steiner states that she applied a negative 31% adjustment to Sale 2’s dwelling to make it comparable to the Subject Property’s dwelling and determined an overall assessed value of $47,000. If the value for the Subject Property’s pre-engineered metal building is removed, the assessed value is $36,000. She asserts that this value falls within an acceptable range of value.

22Ms. Steiner states that her opinion of the Subject Property’s current value is $73,000.

Appellant’s Evidence and Submissions

23Mr. Taddeo takes the positon that the Subject Property has a current value of about $60,000. He states that there have been no changes or improvements. He does not see the reason for its assessed value to have gone up so much.

24Mr. Taddeo took issue with the description of the outbuilding as a “pre-engineered industrial building”. He states that this type of building is not uncommon in northwestern Ontario and that he uses it for storage. His mother’s car is parked inside and he also stores two boats there. He added that a front loader used to clear snow was parked inside the structure at the time of inspection because of the cold.

25He asserts that MPAC has not taken into account the access issue as the Subject Property has no direct access to Highway 17. It cannot be sold the way it is. He acknowledges that he owns land on either side and in front of the Subject Property. However, the Subject property is essentially landlocked. There is no right of way on title allowing access to the Subject Property from adjacent land. Also, there no independent connection to municipal water and sewer services. Rather, there is a water and sewer line that runs from the property located at 501 Main Street (the repair garage) and across 503 Main Street (adjacent land) to the Subject Property.

26Mr. Taddeo takes the position that MPAC’s proposed comparable properties are not good comparators as they do not have the same access or water and sewer services issues.

27The Board asked Mr. Taddeo whether the Subject Property has ever been appraised. He responded ‘no’. He states that his father passed away three years ago and it was deemed more cost effective to use the 2012 assessed value of $63,000 for purposes of probate and land transfers.

Board’s Analysis and Findings

28Under 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 Subject Property on the valuation date or close to it.

29In the absence of a sale of the Subject Property, 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, 2016.

30To enable an estimate of value for the property to be derived from suggested comparable properties, there must be sufficient elements of similarity, 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.

31Ms. Steiner states that the pre-engineered steel building is valued using the cost approach and she provided details of how she arrived at the assessed value of $36,000. Mr. Taddeo did not present any evidence (other than refer to the cost of $7,000 to build the structure in 1971) to contradict this opinion of value.

32The Board finds Sale 2 to be reasonably comparable to the Subject Property in terms of total building size, quality of construction, and lot size. It was built around the same time as the Subject Property but has a higher effective year of build of 1975 due to renovations. It also has a detached garage. The Subject Property has a pre-engineered steel building whereas Sale 2 does not.

33Ms. Steiner explained how she adjusted Sale 2 and determined an assessed value of $47,000. If the value for the Subject Property’s pre-engineered steel building is removed, its assessed value is $36,000. She asserts that this value falls within an acceptable range of value.

34The Board finds the other proposed comparable sales are not comparable to the Subject Property and are inferior. Sales 3, 4 and 5 have much smaller lot sizes. Sales 1 and 4 have a lower quality of construction than the Subject Property. Sales 3 and 5 has no outbuilding and Sale 1 only has a shed. None of these properties have a pre-engineered metal building like the Subject Property.

35Ms. Steiner detailed how she arrived at her opinion of current value of $73,000. However, the Board finds that this opinion does not take into account that the Subject Property has no direct access to Highway 17 and that there is no right of way on title allowing access to the Subject Property from the adjacent land. Also, there is no direct independent connection to municipal water and sewer services. Therefore, the Board finds that MPAC has not met its burden to prove the correctness of the current value.

36Mr. Taddeo states that he used the Subject Property’s 2012 assessed value of $63,000 for probate issues and to transfer ownership of the Subject Property three years ago after his father passed away. He was of the opinion that this value best reflected the Subject Property’s fair market value at the time, taking into account the access and water issues. The Board is not persuaded on a balance of probabilities that reliance on the 2012 assessment by Mr. Taddeo for probate issues and to transfer ownership of the Subject Property is a good measure of the Subject Property’s current value as of the legislated January 1, 2016 valuation date.

37Following the reasoning of Member Jebreen and Vice Chair McAnsh in Jay Patry Enterprises Inc. v. Municipal Property Assessment Corporation, Region 05, 2019 CanLII 39629 (ON ARB), 2018 CanLII 70338 (ON ARB), the Board finds that in the circumstances of this case, there is insufficient evidence presented to make a current value determination and that a fair consequence for MPAC failing to meet its statutory burden is to reduce the assessment to the last uncontested assessment of the property.

38For all of these reasons, the Board sets the assessment of the Subject property at $63,000. Given this finding, the Board does not find it necessary to consider whether an equitable adjustment is required under s. 44.(3)(b) of the Act.

CONCLUSION

39The Board finds that the current value of the Subject Property, as of the January 1, 2016 valuation date has not been proven. The Board therefore sets the assessment at its last uncontested value of $63,000.

40Therefore, the assessment of the Subject Property located at 505 Main Street is reduced from $79,000 to $63,000 for the 2017 and 2018 taxation years.