Joanne Rusnell v. Municipal Property Assessment Corporation, 2018 CanLII 118875

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

December 4, 2018

FILE NO.:

WR 155442

Assessed Person(s):

Joanne Rusnell

Appellant(s):

Joanne Rusnell

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 17

Respondent(s):

Township of Muskoka Lakes

Property Location(s):

Island K

Municipality(ies):

Township of Muskoka Lakes

Roll Number(s):

4453-090-005-05300-0000

Appeal Number(s):

3264756 and 3308954

Taxation Year(s):

2017 and 2018

Hearing Event No.:

703465

Legislative Authority:

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

Heard:

August 28, 2018 by telephone conference call

APPEARANCES:

Parties

Counsel+/Representative

Joanne Rusnell

Self-represented

MPAC

Pam Mulligan

Township of Muskoka Lakes

No one appeared

MEMORANDUM OF ORAL DECISION DELIVERED BY VINCENT STABILE ON AUGUST 28, 2018

INTRODUCTION

1The subject property is a small island, known as Island K, on Leonard Lake. It is approximately 450 square feet in size. It is not buildable and accessed by water only. No hydro is available. It is governed by By-Law OS4 which restricts it use as “green space” permitting a dock and picnic shelter, but nothing further.

2The property has been owned by the same family for many years. For the January 1, 2012 valuation day, MPAC assessed the property at $1,200. For the January 1, 2016 valuation day, MPAC returned the assessment at $6,900 for the 2017 taxation year and $6,500 for 2018 taxation year, using the Direct Sales Comparison Approach.

3The Appellant questions the substantial increase from the previous assessment cycle.

ISSUE

4The issue to be determined, therefore, was the correct current value of the property as of January 1, 2016.

DECISION

5The Board determined the correct current value for the 2017 and 2018 taxation years was $6,500 and accordingly the assessment for the 2017 taxation year is reduced from $6,900 to $6,500 and the assessment for the 2018 taxation year confirmed at $6,500 as returned. The Board further determined that no further adjustment for equity was warranted.

EVIDENCE

MPAC

6The assessor, Pam Mulligan, filed a Valuation Report proposing an assessment of $6,500 as of January 1, 2016 valuation day using the Direct Comparison Approach. She acknowledged that the assessment for the 2017 taxation year had been returned at $6.900 but recommended that it be reduced to $6,500 consistent with the 2018 taxation year. She proposed the sales of six comparable properties, all described as ‘superior to the subject property’ predominantly because of their lot size. All are described as unbuildable, single owner islands on lakes with water access only.

7The comparable sales ranged in value from $14,800 to $160,000.

8In her report, and as explained in her oral testimony, Ms. Mulligan informed the Board that:

For the 2016 Assessment Update (taxation years 2017 – 2020) MPAC conducted a full review of all single owner islands (Property Code 111) under two acres which were considered unbuildable due to their size or zoning. MPAC had identified some historic inconsistent treatment which created inequity in the valuations of these properties. Some had numerous variables and adjustments applied to mitigate the values whereas others had not. To become more transparent, equitable and fair in the approach to valuation on these properties, commencing in the 2016 base year these islands were all assessed using the direct sales comparison approach to value. A consistent adjustment was made to each to reduce the value by -90% to reflect the fact that they are unbuildable islands.

9In essence, MPAC determined that the subject property, if buildable, had a market value of $65,000. Since it is not buildable MPAC applied a reduction of –90%.

10On cross-examination by the Appellant, Ms. Mulligan confirmed that all of the proposed comparable properties had received the similar adjustments.

Appellant

11Ms. Rusnell had filed some material, consisting of photographs, google maps, and general public information confirming the restrictions as to the use of the subject property.

12Ms. Rusnell questioned the assessor as to the approach to value used by MPAC and received an explanation of the newly applied valuation process applied by MPAC on properties similar to the subject.

Legislation

13Section 44.(3)(a) of the Assessment Act, R.S.O. 1990, c A.31 (“Act”) requires this Assessment Review Board (“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.

14Once 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

15In these appeals, the Board must determine the correct current value.

16As 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.

17In arriving at the assessment of $6,500, as returned, MPAC used the Direct Sales Comparison approach.

18On the evidence received, the Board accepts that the direct sales approach is the best approach to value the subject property as it considers what similar properties in the area sold for.

19The 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. It can also include restrictions that run with the land imposed by municipal or provincial legislation.

20To assist in its determination of value, the Board uses other tools such as value per square foot, bracketing and cost to cure. Bracketing 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. Bracketing is based on the general principle that a comparable property that has superior attributes than the subject will sell for more.

21MPAC has proposed six (6) comparable properties. They have been noted as ‘superior to the subject property’ predominantly for lot size. The Board accepts that all of the comparable properties are single owner, unbuildable and have water access only. Two of the comparable properties are in the same municipality. The Market Analysis Grid and Description table found at page 10 of the assessor’s report shows that the actual site area of each of the comparable properties are larger than the subject property by factors of 2 1/2 – 10 times.

22The range of value of the comparable properties proposed is $14,800 to $160,000. Considering the principle of economies of scale, the sales results are consistent with general expectations.

23Having considered the economies of scale and the method of ‘bracketing’ , the Board is satisfied that MPAC has applied a similar approach to value to the comparable properties as well as the subject property, by considering all of the components and making a negative adjustment of -90%.

24The assessment of $6,500 for the subject property, as returned by MPAC, predictably is lower than the comparable properties. As noted above, this is consistent when considering the economies of scale.

25Accordingly, the Board finds that the correct current value for the subject property for the 2017 and 2018 taxation years is $6,500. The assessment for the 2017 taxation year is therefore reduced from $6,900 to $6,500 and for the 2018 taxation year the assessment is confirmed at $6,500 as returned.

Equity

26The only evidence received on the issue of equity was from MPAC.

27The evidence consisted of an Assessment to Sales Ratio (“ASR”) Study (ASR) of thirty (30) properties resulting in a median ASR of 1.011.

28The assessor stated that equity was achieved if the median ASR falls between 0.95 – 1.05. This was the best evidence available. There is no evidence indicating that it would be unfair or inequitable to assess the property at its current value.

CONCLUSION

29The Board determined that the correct current value for the 2017 and 2018 taxation year was $6,500. The assessment for the 2017 taxation year is therefore reduced from $6,900 to $6,500. The assessment for the 2018 taxation year is confirmed at $6,500. Further, that no further reduction for equity was warranted.