Simmatis v. Municipal Property Assessment Corporation, 2018 CanLII 124900

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

December 24, 2018

FILE NO.:

WR 153593

Assessed Person(s):

Dennis Erik Simmatis and Catherine Marie Smola

Appellant(s):

Dennis Erik Simmatis and Catherine Marie Smola

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 06

Respondent(s):

Township of Alnwick/Haldimand

Property Location(s):

86 Rolling Banks Road, Unit 36B

Municipality(ies):

Township of Alnwick/Haldimand

Roll Number(s):

1450-226-020-18500-0000

Appeal Number(s):

3256771 and 3292652

Taxation Year(s):

2017 and 2018

Hearing Event No.

697377

Legislative Authority:

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

Heard:

May 23, 2018 in Grafton, Ontario

APPEARANCES:

Parties

Representative

Dennis Simmatis

Self-represented

MPAC

Robert Zamozniak and Terri Lyn Wright

Township of Alnwick/Haldimand

Kathy Morain and Daryl Hall

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

Background

1Dennis Erik Simmatis and Catherine Marie Smola (the “Appellants”) are the owners of 86 Rolling Banks Road, Unit 36B, in the Township of Alnwick/Haldimand (the “Subject Property”). The Subject Property is described as a Seasonal/Recreational dwelling, located at 86 Rolling Banks Road in the Township of Alnwick/Haldimand. The Subject Property was built in 2012, has a total site area of 2.8 acres, and a total building area of 3,644 square feet (“sq. ft.”). Also located on the Subject Property are an older cottage built in 1958, two older sheds (one built in 1958, and the other built in 1983) and an old boathouse built in 1980.

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (“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 (“current value”).

3MPAC has assessed the current value of the Subject Property at $749,000 for the 2017 taxation year and at $673,000 for the 2018 taxation year.

4MPAC takes the position that the current value is $673,000.

5The Appellants have filed appeals for the 2017 and 2018 taxation years 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 they raised four issues they believe impact the assessed value of the Subject Property. Issue 1, Topography of the Site Area; Issue 2, Right-of-Way Access; Issue 3, Easements; and Issue 4, Condition of the Waterfront. Based on these arguments, and the sales of comparable properties, the Appellants’ position is that the current value should be $540,000.

6Pursuant to s. 40(11) of the Act, the Township of Alnwick/Haldimand is a party to this proceeding. Kathy Morain and Daryl Hall were in attendance on behalf of the Township. However, they did not actively participate and only observed the hearing. They assert no position on behalf of the Township.

7Section 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 the municipal tax burden according to the value of the property possessed by each ratepayer.

8MPAC takes the position that an equitable reduction is not required.

9The Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.

10At the completion of the hearing, the Board reserved its decision. The Board later asked for written submissions on the applicability of the principles set out in Jay Patry Enterprises Inc. v Municipal Property Assessment Corporation, Region 05, 2019 CanLII 39629 (ON ARB), 2018 CanLII 70338 (ON ARB) (“Jay Patry Enterprises”). Both MPAC and the Appellant provided submissions.

11For the reasons that follow, the Board finds that the current value for the 2017 and 2018 taxation years is $673,000. Pursuant to s. 44(3)(b) of the Act, an equitable reduction of this value is not required.

Relevant Legislation

12Section 1 of the Act states:

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.

13Section 19.(1) of the Act states:

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

14Section 19.2(1) of the Act states:

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.

15Section 40.(17) of the Act states:

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.

16Section 44.3(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.

Issue

17The issue to be determined on these appeals is the correct current value of the Subject Property for the 2017 and 2018 taxation years.

Discussion, Analysis and Findings

MPAC’S Evidence

18Robert Zamozniak is the Advocate for MPAC (“MPAC’s advocate”) and Terri Lyn Wright is the Witness for MPAC (“MPAC’s witness”). MPAC’s advocate called on MPAC’s witness and she gave an overview of her academic background, related work experience and work related designation. MPAC’s witness presented a Valuation Report, dated January 5, 2018 (“Valuation Report”) which she prepared and testified to the information contained in the report.

19MPAC’s witness states that the returned assessed value of $749,000 for the Subject Property includes a negative 10 percent adjustment for overbuilt structure for the neighbourhood. The reason is that the Subject Property’s new structure is above average size and does not compare to the older and smaller cottages in the area.

20MPAC’s witness also testifies that the Subject Property is assessed as having two-thirds of the waterfront a steep slope (poor quality land) and that a negative adjustment of $81,000 was included in the returned assessed value of $749,000. In response to the issue of whether the waterfront is a cliff as opposed to steep slope, MPAC’s witness testifies that the negative adjustment would have been $7,000 for a cliff. She also testifies that the Subject Property is assessed as a lakefront property with lake access.

21MPAC’s witness states that the Subject Property was inspected on May 3, 2017. During the inspection MPAC’s witness found that the Subject Property has two full bathrooms with sink, bath and/or shower and toilet, and one half bath with sink and toilet, instead of one full bath and two half baths. She also stated that the structure and site area information were updated. The impact of these changes results in an adjustment of $7,000.

22MPAC’s witness testifies that during the inspection, she had an opportunity to walk the grounds of the Subject Property, and observed that there are two easements that run along the southern and northern borders towards the depth of the parcel of land, each being 15 feet wide. She testifies that the waterfront is weedy and rocky.

23MPAC’s witness testifies that the Appellants had filed an appeal with the Board for the returned assessment for the 2016 taxation year, (valuation date January 1, 2012). She testifies that the Board ruled in Simmatis v Municipal Property Assessment Corporation, Region No. 06, [2017] CanLII 39816 (“Simmatis”) in favour of a negative adjustment of $30,000 for the two easements ($15,000 each). Based on this ruling, MPAC carried forward the adjustment to the valuation date of January 1, 2016, and further adjust the amount by 16 percent to increase the negative adjustment to $34,800 ($30,000 x 1.16) to reflect market trends.

24MPAC’s witness testifies that she also observed that four of the secondary structures (the cottage, two small sheds, and a boathouse) of the Subject Property are old and derelict. Based on the poor condition of these four structures, the total value of $48,000, which was attributed to the assessed value of the Subject Property, was removed.

25In regard to an issue of the Subject Property not having right-of-way access to a municipal road, MPAC’s witness presented a copy of the Land Transfer Tax Affidavit, signed in the City of Toronto, on January 25, 2011 by the Appellants which clearly states “IN THE MATTER OF THE CONVEYANCE OF RIGHT OF WAY – Parts of Lots 13 and 14, Concession 5 Alnwick, Township of Alnwick/Haldimand, County of Northumberland” to show that the right-of-way access is legal and that the assessed persons should be aware having signed the Land Transfer documents. Also supporting the Land Transfer is a copy of a document from Service Ontario, dated May 2, 2018 which confirms the 2011 transfer, with remarks indicating right-of-way.

26Based on the findings of the inspection, the assessed value of $749,000 is adjusted to $673,000 ($749,000 + $7,000) – (34,800 + 48,000).

27MPAC’s witness presents the sales of six suggested comparable properties located in the same homogeneous area, within five kilometres of the Subject Property, and sold in 2015. She testifies that all six suggested comparable properties have right-of-way access, as does the Subject Property. Three of the suggested comparable properties have year round access and are classified as Single Family detached, and the remaining three are classified Seasonal/Recreational like the Subject Property.

28These six suggested comparable properties are located at 6108 Curtis Point Road, unit 55, sold in 2015 at a time adjusted sale price of $318,470; 6366 Shearer Point Road, sold in 2015 at a time adjusted sale price of $415,630; 216 Hampton Crescent, sold in 2015 at a time adjusted sale price of $433,807; 86 Rolling Banks Road, sold in 2015 at a time adjusted sale price of $427,106; 14 Parker Road, sold in 2015 at a time adjusted sale price of $374,366; and 6 7^th Line Road, sold in 2015 at a time adjusted sale price of $359,256.

29MPAC’s witness testifies that these six suggested comparable properties are inferior to the Subject Property. An analysis of these six sales shows that on average these six suggested comparable properties sold at time adjusted sale price of $310.22 per sq. ft., year built 1970, quality of construction 5.8, total building area 1272 sq. ft., total site area .44 acres, and total frontage of 116 feet. Applying the sale price per sq. ft. to the Subject Property it results in a value of $1,130,000 ($310.22 x 3644 sq. ft. based on total building area).

MPAC’s Submissions

30MPAC’s advocate submits that the correct current value is $673,000. He argues that the proposed current value of $540,000 by the Appellants is based on the sale of one suggested comparable property that is older and significantly smaller in total building area and lot size than the Subject Property.

31MPAC’s advocate submits that if the Subject Property frontage is a cliff, then there would be no need for the two easements.

32MPAC’s advocate submits that MPAC’s witness estimates that it would cost $455,500 to build a structure similar to the Subject Property using a professional builder, as opposed to the Appellants estimate of $364,000 to build your own home. Both parties obtained their respective estimate using the Build-a-Home Calculator on the OntarioContractors.com website.

33MPAC’s Advocate submits that all waterfront properties which fall within the Oak Ridges Moraine Conservation Plan and the Lower Trent Conservation Plan designated areas must get set-back approval before any building is constructed on waterfront properties. He argues that all the suggested comparable properties and the Subject Property would have had to comply with requirements of the above two Conservation Plans.

34MPAC submits, in their response to the Board’s request, that there is no reason to apply Patry. It says that the Board has sufficient evidence to determine the assessment and that MPAC has satisfied its burden of proof. In the alternative, MPAC argues that if the Board applies Patry, it must take changes to the Subject Property into account.

35Finally MPAC’s Advocate cited three cases to assist the Board in its determination of current value:

1. McClocklin v. Municipal Property Assessment Corp. Region No. 16 [2006] O.A.R.B.D. No. 223 (“McClocklin”);

2. 1371254 Ontario Inc. v. Municipal Property Assessment Corp. Region No. 9, [2003] O.A.R.B.D. No. 3 (“1371254 Ontario Inc.”); and

3. White v. Municipal Property Assessment Corp., Region No. 22, [2012] O.A.R.B.D. No. 27 (“White”);

Appellant’s Evidence

36Dennis Simmatis represents the Appellants.

Issue 1: Topography of the Site Area

37The Appellants state that the Subject Property is a cliff property (with approximately 130 feet appropriate for walking) and not a property with a steep slope as stated by MPAC. As such, the Appellants are of the view that the negative adjustment ($81,000 allowed by MPAC for a steep slope and poor condition of the land) should be 15 percent higher. The Appellants stated that the increase is based on a January 1, 2016 Residential Report regarding market value for the Peterborough, Kawartha Lakes region. However, the report was not presented into evidence.

Issue 2: Right-of-Way Access

38The Appellants testify that the Subject Property is not located on a paved road and they have to cross over private properties to get to the paved road. The Appellants state that Rolling Banks Road is a paved municipal road that cuts off before it reaches the Subject Property and continues as a dirt path, as shown on the Appellants’ map. The Appellants testify that the deeded access is the right-of-way to the travelled road (paved municipal road) and not to a dirt road. Therefore, the Appellants believe that the value of the Subject Property would be negatively impacted because it does not have right-of-way access.

Issue 3: Easements

39The Appellants testify that there are two easements on the Subject Property (one on the north side and one on the south side). The Appellants state that the easement on the north side benefits six neighbouring sites and benefits two neighbouring sites on the south side. Therefore, the Appellants believe that the negative adjustment should be $120,000 ($15,000 x 8 neighbouring sites).

Issue 4: Condition of the Waterfront

40The Appellants testify that the lake water that abuts the land and causes water damage and other nuisances. The Appellants present copies of photographs to demonstrate the condition of the waterfront and damages to the structures.

41The Appellants testify that the waterfront is woody, weedy, and swampy and is used for dumping waste by people in the neighbourhood. The Appellant also testify that the Subject Property falls within the Oak Ridges Moraine Conservation Plan designated area and has to comply with the requirements of the plan. It is the Appellants opinion that a negative adjustment of 35 percent is appropriate to address the condition of the waterfront, damages to the structures, and the impact of the Oak Ridges Moraine Conservation Plan on the assessed value of the Subject Property.

42The Appellants also present an estimate of what they believe it would cost to build a structure as the Subject Property. Using the Build-a-Home Calculator on the OntarioContractors.com website the Appellants estimate it would cost $364,000 to build your own structure, similar to the current structure of the Subject Property.

43The Appellants present the sale of five suggested comparable properties which sold over the period 2012 to 2015. These suggested comparable properties are located at 6 Rolling Banks, sold in 2015 for $330,000 (time adjusted sale price of $336,685); 216 Hampton Crescent, sold in 2012 for $360,000 and sold in 2015 for $392,000 (time adjusted sale price of $433,807); 138 McCracken Road, sold in 2013 for $440,000; and at 14 Parker Road, sold in 2015 for $368,000 (time adjusted sale price of $374,366).

44These five suggested comparable properties have on average a total building area of 1282 sq. ft.; quality of construction of 5.9; lot size of 2.6 acres; frontage of 246 ft.; year built 1983; and sold at a sale price of $299.85 based on total building area. Applying this average sale price per sq. ft. of $299.85 to the Subject Property results in a value of $1,092,653 ($299.85 x 3644 sq. ft.).

Appellants’ Submissions

45The Appellants are of the view that the correct current value for the Subject Property is $540,000.

46The Appellants submit that it would be difficult to get financing because of the poor condition of the shoreline; and that a lack of access to the municipal road would significantly reduce the value of the Subject Property.

47The Appellant submits that MPAC’s six suggested comparable properties are not similar to the Subject Property.

48The Appellants submit that the Patry case directly applies to this hearing. They say that it should be considered with a view of returning the assessed value to $190,000. The Appellants also provided further information in which they wanted the Board to consider.

49The Board gives no consideration to the Appellants’ additional information, because the Board’s directions were clear that the Board is not seeking new evidence. It was only inviting submissions on the applicability of the Patry decision.

Findings on Current Value

50In reviewing the evidence presented by both parties to reach a determination of current value, this Board agrees with the McClocklin case in which it states that “the Board does not have the power to act administratively but must act judicially, and must base it decision solely on the evidence presented at the hearing.”

51In regard to adjustments for topography of the site area, the role of the Board is not to determine adjustments. The Board relies on sales evidence of suggested comparable properties and the degree of similarity to the Subject Property to determine current value.

52In regard to the right-of-way access, the Board accepts MPAC’s evidence of a copy of the Land Transfer Tax Affidavit, signed in the City of Toronto, on January 25, 2011 by the assessed persons (Dennis Erik Simmatis and Catherine Marie Smola) and accepts the Service Ontario document, dated May 2, 2018 which confirms the Land Transfer Tax Affidavit. The Board finds that the assessed persons should be aware of the right-of-way access having signed the Land Transfer documents. On the contrary, the Appellant only presented a copy of a map to illustrate the location of the Subject Property in relation to the paved portion of the municipal road, and the unpaved dirt road, which provides no legal basis or quantitative impact on the assessed value to assist the Board in its determination of current value.

53Also in regard to the right-of-way access, the Board is not satisfied that there is a right-of-way issue that would impact the assessed value of the Subject Property.

54In regard to the easements, the Board accepts the decision in the Simmatis case and accepts the time adjustment of $for market trends put forward by MPAC. On the contrary, the Board rejects the Appellants argument that a negative adjustment of $120,000 (total of eight benefiting properties) is appropriate. The Appellants present no official documents to show that six other neighbouring sites benefit from the easements. In this situation, the Board finds that s. 9 (1) of the Act does not apply.

55In regard to the condition of the waterfront, the Board rejects the Appellants argument that a reduction of 35 percent is warranted to address the poor condition of the waterfront, damages to the structures, and the impact of the Oak Ridges Moraine Conservation Plan on the assessed value of the Subject Property. The Board finds that the Appellants failed to present prove that 35 percent was the right reduction. They also failed to present cost-to-cure evidence from a professional company to remedy the issues surrounding the condition of the waterfront.

56In regard to the Appellants’ estimated cost of $364,000 to build your own structure similar to the Subject Property and MPAC’s estimated cost of $455,500 to build a structure using a professional builder, the Board finds that both MPAC and the Appellants failed to present an itemized Cost Approach Analysis to show how they arrived at their respective values. As a result, the Board is unable to complete a current value analysis using these estimated values.

57In reviewing the Appellants’ 5 sales of suggested comparable properties which sold over the period 2012 to 2015, the Board did not rely on the suggested comparable properties located at 138 McCracken Road, sold in 2013; and at 216 Hampton Crescent, sold in 2012, because these sale dates are too far removed from the valuation date of January 1, 2016, to provide any meaningful test of current value.

58The remaining three suggested comparable properties will be considered for current value. They are located at 6 Rolling Banks Road, sold in 2015 at a time adjusted sale price of $336,685; 216 Hampton Crescent, sold in 2015 at a time adjusted sale price of $433,807; and 14 Parker Road, sold in 2015 at a time adjusted sale price of $374,366. These three suggested comparable properties have on average a total building area of 1241 sq. ft.; a site area of 3.86 acres; a frontage of 299.66 feet; year built 1979; and at a time adjusted sale price of $310.05 per sq. ft. (based on total building area). Applying the average sale price of $310.05 to the Subject Property, results in a value of $1,130,000 rounded ($310.05 x 3644 sq. ft.).

59In regards to current value, the Board finds that the six suggested comparable properties presented by MPAC and the above three suggested comparable properties presented by the Appellants (two of which are also presented by MPAC) are inferior and on average significantly smaller in total building area, frontage, total lot size and older than the Subject Property. Having excluded the two suggested comparable properties at 216 Hampton Crescent and 14 Parker Road presented by both MPAC and the Appellants, the remaining seven suggested comparable properties have on average a total building area of 1,235 sq. ft.; a total lot size of 1.93 acres; a total frontage of 199.78 feet; year built 1969; and sold at a time adjusted sale price of $313.43 per sq. ft. based on total building area.

60Applying the sale price of $313.43 per sq. ft. to the Subject Property results in a value of $1,142,138 ($313.43 x 3644 sq. ft.). This is compared to the Subject Property with a total building area of 3,644 sq. ft.; frontage of 536.04 feet; total lot size 2.82 acres; built in 2012; and assessed at $749,000 for 2017 taxation year and $673,000 for 2018 taxation year.

61Although the sales of these suggested comparable properties presented by both parties provide the Board with a market value for properties inferior to the Subject Property, the cost per sq. ft. of the Subject Property is likely to be lower than that of the inferior properties, because of economy of scales. The fact that there are no sales of superior comparable properties presented to establish a range of sales value (inferior and superior), that would have assisted the Board in its determination of current value, the Board is considering the applicability of the decision of Jay Patry Enterprises.

62In reviewing the submissions presented by both parties, the Board finds that MPAC has met its burden to demonstrate the correctness of the assessment by presenting a path to determining current value based on sales evidence. MPAC submits that the current value should be $781,500 which is the mid-point between the highest sale price of $433,000 and $1,130,000.

63Based on the submissions and after revisiting the evidence the Board agrees with the parties that there was much difficulty finding sales of suggested comparable properties similar to the Subject Property. However, this situation is likely to happen because of the oversized nature of the Subject Property for its neighbourhood.

64Based on the evidence Board finds that the best evidence of current of current value is the mid-point of the sales values presented and the notional value based on the value per sq. ft. of the sales. The highest sale price is $433,807 and the value indicated by the sales per sq. ft. basis when applied the Subject Property is $1,142,138. The midpoint of those two values is $787,972.50, which rounds to $788,000.

65Based on this analysis, the Board further reduced the $788,000 by $82,800 to arrive at a value of $705,200. This reduction comprises a reduction of $34,800 for the two easements; and a reduction of $48,000 for four old and derelict secondary structures (the cottage, two small sheds, and a boathouse) of the Subject Property that were removed by MPAC.

66Based on the evidence the Board finds the current value is $705,000 (rounded).

CONCLUSION

67The Board finds the current is $705,000. However, MPAC presents a revised assessment of $673,000 based on an inspection of the Subject Property which the Board accepts. Therefore, the Board reduces the returned assessment value from $749,000 to $673,000 for the 2017 taxation year, and confirms the returned assessment value of $673,000 for the 2018 taxation year.