Ouellette v. Municipal Property Assessment Corporation, 2018 CanLII 113008

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 21, 2018

FILE NO.: WR 156344

Assessed Person(s): Christine Ouellette; Roland Ouellette

Appellant(s): Christine Ouellette; Roland Ouellette

Respondent(s): Town of Collingwood

Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 16

Property Location(s): 10 Campbell Street

Municipality(ies): Town of Collingwood

Roll Number(s): 4331-070-003-00501-0000

Appeal Number(s): 3267755 and 3308224

Taxation Year(s): 2017 and 2018

Hearing Event No. 703687

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

Heard: September 5, 2018 in Collingwood, Ontario

APPEARANCES:

Parties	Counsel+/Representative
Christine Ouellette and Roland Ouellette	Self-represented
MPAC	Patricia A. Thomson+ Lynda Grimshaw
Town of Collingwood	No one appeared

MEMORANDUM OF RESERVED DECISION BY VINCENT STABILE

INTRODUCTION

1The subject property is a single-storey detached residential dwelling built in 1983 with a building area of 1,144 square feet with similar size basement, 600 square feet of which is finished. It has three bedrooms and two baths. The quality of construction is 6. It is situated on a lot of size of 50.49 feet of frontage by 122.73 feet in depth.

2The property also has an in ground pool measuring approximately 512 square feet built in 1993, however this feature is not being considered as part of the assessment for purposes of these appeals. MPAC has determined that a data adjustment is required for the subject property to account for forced air, air conditioning, and in ground pool, increasing the value by $31,000. MPAC intends to serve a Notice pursuant to s. 32 of the Assessment Act R.S.O. 1990 c. A31 ("Act"), to increase the value to $294,000 effective the 2019 taxation year.

Background

3For the January 1, 2016 valuation date, MPAC returned the assessment at $263,000 using the direct sales comparison approach.

4The appellant agreed with the approach to value but submitted that MPAC failed to consider that the comparable properties are generally situated in a different homogeneous neighbourhood, where, she submitted, the properties have higher values. The appellant further challenged the results of the 'model' used by MPAC in its multi-regression assessments, as well as the time adjustment and equity studies relied upon.

5In short, the appellant submitted that any increase from the previous cycle should not exceed the general increase locally, as published by MPAC from time to time.

ISSUE

6The issue to be determined, therefore, was the correct current value of the property as of January 1, 2016 for the 2017 and 2018 taxation years.

DECISION

7The Assessment Review Board (the "Board") determined the correct current value for the 2017 and 2018 taxation years was $263,000. The Board further determined that no further adjustment for equity was warranted. The assessment as returned was therefore confirmed.

EVIDENCE

MPAC

8The assessor, Lynda Grimshaw, filed a Valuation Report proposing an assessment of $294,000 as of January 1, 2016 (Valuation Day) using the Direct Comparison Approach. She proposed the sales of six comparable properties, all described as 'similar', with a range of values, not time adjusted, of $260,000 to $345,000. Time adjusted, the range of values was $255,000 to $363,000 (rounded).

9Relying upon a study of 491 sales from 2015-01-15 to 2016-12-22, a period of 23 months, Ms. Grimshaw stated that there had been an overall change (increase) in the market of 38.14 per cent.

10Comparable property number two, 14 Campbell Street, is located to the side of the subject property, on the same street. It has similar attributes: same age, quality class and lot size. It is 232 square feet larger, with a basement apartment. That property sold on March 13, 2015, for a time adjusted sale price of $308,000 (rounded).

11The assessor stated that comparable property number two was the most comparable, given the location and specific similarities to the subject property.

12The assessor also maintained that the since the returned assessment of $263,000 for the subject fell within the range of values, both actual sales and time adjusted sales, of the comparable properties, the assessed value of $263,000 was correct.

Appellant

13As already stated, Ms. Ouellette challenged all evidence relied upon by MPAC.

14Ms. Ouellette submitted that her property had been unfairly assessed by MPAC from the time of purchase in 2008, for $185,000. She reviewed in some detail the discussions she had undertaken with MPAC for the years 2008 to 2013. She stated that various reductions had been conceded by MPAC over that time resulting in an agreed assessment for the 2013 taxation 2013 of $201,000.

15Ms. Ouellettte stated that the subject property had always been over assessed by 17%.

16She stated that values should not be determined by using the value per square foot. She strongly urged the Board to reject 14 Campbell Street because it should be assessed as "an income property".

17Although the in ground pool and other amenities were not being considered in these appeals, Ms. Ouellette argued that pools should be considered as a 'negative to value' on account of their inherent dangers to families with small children.

18Ms. Ouellette filed a list of 24 proposed comparable properties. In the end, however, she urged the Board to determine the value based on the 2008 purchase price of $185,000 and adding the percentage ("%") increase in subsequent assessment cycles.

19She submitted, based on general articles published by MPAC, that in the Collingwood area, there was a general price increase of 18% for the 2016 assessment cycle from the previous cycle.

20Given her settlement with MPAC for the 2013 taxation year, at $201,000, she urged the Board to increase the $201,000 by 18% ($36,180) for a total of $237,180.

LEGISLATION

21Section 44.(3)(a) of the Act requires the Board to "determine the current value of the land." Current value is defined in s. 1 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." That is, the Board must determine what the subject property would have sold for in an arm's length transaction on the relevant valuation day, set pursuant to s. 19.3 of the Act, in this case January 1, 2016 for the 2017 and 2018 taxation years.

22Once the current value has been determined, s. 44.(3)(b) requires that the Board "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.

ANALYSIS

23The Board must determine the current value of the subject property from the evidence received.

24The Board accepts that there are three methods for estimating what a property would likely sell for: (1) the sales comparison approach; (2) the income approach; and (3) the cost approach.

25The direct sales approach is the most commonly used for residential properties as it considers what similar properties in the area sold for. The issues that arise in applying this method, generally, are the degree of comparability between the properties and the date on which the properties sold. The degree of similarity between the properties refers to the physical characteristics and their locations.

26MPAC used a statistical method known as multiple regression analysis to determine the assessment of the subject property. It is essentially the direct sales comparison approach on a massive scale, using many sales of properties having identified characteristics such as location, land, area, improvements, size, relative quality and age, all of which may have an influence on value.

27To assist in its determination of value, the Board uses other tools such as value per square foot, bracketing, and cost to cure.

28The value per square foot of area can be a useful metric in the sales comparison approach but is generally very reliable when comparable properties are very comparable.

29The cost to cure is an analysis to determine the cost required to upgrade the subject property to the level of proposed comparable properties.

30Bracketing is a very good method for comparing properties in the direct sales approach when very few properties are provided in evidence that can be considered directly comparable.

31The Board received sufficient evidence to apply both the value per square foot and bracketing to test the correctness of the assessment as returned. No evidence in respect to the cost to cure was received.

32On the evidence received from MPAC, the following results emerge in determining a value per square foot:

• range of value $240.75 - $316.51
• median value $257.97
• average value $263.28

33The subject property is assessed at $229.89 per square foot, well below the range, median and average values of the comparable properties proposed by MPAC, as calculated.

34The range of values of the comparable properties relied upon by MPAC are as follows:

• Not time adjusted $260,000 - $345,000
• Time adjusted $254,680 - $362,676

35The appellant proposed a list of 24 comparable properties. Upon close examination, and as conceded by Ms. Ouellette on cross-examination, 19 of the proposed sales were for the years 2012, 2013, and 2014, thus were discounted as being outside of the generally accepted shoulder years of one year prior and one year from the valuation day, in this case January 1, 2016.

36Of the remaining five, numbers 6, 10, 13, and 16, were conceded not to be comparable. For instance number 6 was a two-storey semi-detached. Thus these were disregarded.

37Proposed comparable number 17 (14 Campbell Street) was common to both MPAC and the appellant. The appellant, however, urged the Board to disregard this property and submitted that it ought to have been assessed as 'an income property'. That would result in using the income approach to value.

38The Board accepted that 14 Campbell Street was the most comparable property, it being on the same street, same, same quality of construction, and same general attributes.

39The sale price of 14 Campbell Street, not time adjusted, was $267,000 or $240.75 per square foot. The evidence, which was accepted, indicated that this property was 1,109 square feet at the time of sale. Some improvement was made later. Applying this measure to the subject would result in a value of $275,418 ($275,000 rounded).

40The sale price of 14 Campbell Street, time adjusted, was $307,706 or $277.46 per square foot. Applying this measure to the subject would result in a value of $317,414.24 ($317,000 rounded).

41The subject property is assessed at $229.89 per square foot (229.89 X 1,144= $263,000 (rounded)).

42The Board prefers the comparable properties proposed by MPAC and finds that the assessment as returned at $263,000 for the 2017 and 2018 taxation years is within the ranges of values presented both time adjusted and not time adjusted.

43Further, in considering the value per square foot, the Board finds that the subject property is assessed below the range, median or average of the values determined for the comparable properties.

44Additionally, compared to the best comparable (14 Campbell Street), the subject property is assessed at a lower value.

45As it relates to the 'model' used by MPAC in determining its assessment, the Board does not instruct MPAC as what model to use. The Board is only concerned in determining if the model is working properly. That also includes a determination that similar properties are being treated fairly and in like fashion.

46The Board is satisfied that the subject property would likely have sold for more than $263,000 in comparison to similar properties in the vicinity and 14 Campbell Street in particular.

47The Board rejects the submission of the appellant to determine the correct current value by simply applying a percentage increase, or decrease, as the case may be, from one assessment cycle to another. Although it would be a 'simple mathematical exercise', to do so would remove a careful and objective review of all components and attributes of properties the Board considers in determining the correct current value of individual properties.

48Accordingly, the Board finds that the correct current value for the subject property for the 2017 and 2018 taxation years is $263,000. The assessment as returned is therefore confirmed.

EQUITY

49The assessor filed an Equity Analysis Report consisting of an Assessment to Sales Ratio ("ASR") Study of thirty (30) properties resulting in a median ASR of 0.993. The average ASR of the comparable properties relied upon was 0.984.

50The assessor stated that equity was achieved if the median ASR falls between 0.95 – 1.05. She also stated that appraisal uniformity among the properties in the study is measured by determining the average percentage deviation from the median ASR. The statistic is commonly referred to as the Coefficient of Dispersion ("COD"). In this study the COD was a very acceptable 3.0.

51The appellant challenged the study relied upon by the assessor, however did not provide better structured and convincing evidence to displace the evidence of the assessor. Accordingly, the Board finds that there is no evidence that an equity adjustment is required.

CONCLUSION

52The Board determined that the correct current value for the 2017 and 2018 taxation year was $263,000. Further, that no reduction for equity was warranted.