Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 03, 2018

FILE NO.: WR 149592

Assessed Person(s): Brenda Joyce Kallio and Juhani Vilho Kallio

Appellant(s): Brenda Joyce Kallio

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 31

Respondent(s): City of Sault Ste. Marie

Property Location(s): 146 Lake Street

Municipality(ies): City of Sault Ste. Marie

Roll Number(s): 5761-010-003-02300-0000

Appeal Number(s): 3251461

Taxation Year(s): 2017

Hearing Event No.: 689894

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

Heard: December 5, 2017 by telephone conference call

APPEARANCES:

Parties	Counsel+/Representative
Brenda Joyce Kallio Juhani Vilho Kallio	John Kallio
MPAC	Tim Wishman
City of Sault Ste. Marie	Susan Bursche

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

INTRODUCTION

1The Subject Property is a single storey single family detached home (not on water) located at 146 Lake Street in the City of Sault Ste. Marie. It has 1,541 square feet (“sq. ft.”) of total building area and 434 sq. ft. of finished basement area. There is a detached garage and a shed. The property was built in 1961 and a 331 sq. ft. addition was added in 1975 for an effective year of build of 1964. MPAC has assigned it a quality of construction rating of 6. The total effective lot size is 0.25 acres and includes 73.99 ft. of effective frontage. It receives a negative 5% adjustment for being on a City bus route.

2For the 2017 taxation year under appeal, MPAC returned the assessment of the Subject Property at $260,000.

3Tim Wishman, representing MPAC, stated that the assessment was revised from $260,000 to $253,000 following the Request for Reconsideration process. The property was inspected and the effective year of build was adjusted to 1964 to reflect the addition of 331 sq. ft. in 1975 and to apply a negative 5% adjustment to reflect its location on a City bus route. Mr. Wishman’s revised opinion of current value is $253,000. He is also of the opinion that no equity adjustment is required under the Assessment Act (the “Act”). Mr. Wishman submits that the assessment should be reduced from $260,000 to $253,000 for the 2017 taxation year

4John Kallio, on behalf of the assessed persons and the Appellant, submits that the assessment for the Subject Property is still too high and should be assessed at $245,000. Housing prices have dropped due to the poor economic climate in Sault Ste. Marie due to the uncertainty with major employers such as Essar Steel/Algoma and Tenaris Tubes. He submits that the traffic pattern on Lake Street is not “light” due to the high volume of traffic including City buses and heavy trucks. Also, he purchased 15 feet of the adjacent lane from the City in 1999. However, the additional frontage has an easement and he cannot build on this property. He submits that this easement has not been taken into account.

5Under the Act, the Assessment Review Board (“Board”) must first determine the correct current value of the land and then determine whether it should be adjusted to make it equitable with the assessments of similar lands in the vicinity.

DECISION

6For the reasons stated below and under s. 44.(3)(a) of the Act, the Board sets the current value of the Subject Property, as of the valuation day of January 1, 2016, at $225,000 and finds that there is no evidence leading to the conclusion that the current value, as determined above, is inequitable relative to the assessments of similar lands. It requires no further adjustment under s. 44.(3)(b) of the Act.

7Accordingly, for the 2017 taxation year, the assessment is reduced from $260,000 to $225,000.

REASONS FOR DECISION

The Legislation

8Section 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.

9Section 19.(1) of the Act states:

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

10Section 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 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.

Exception

(5) Subsection (1) does not apply in respect of the valuation of land for a taxation year after 2004 if the Minister prescribes a different day as of which land is valued for that year.

11Section 44.(1) of the Act states:

Assessment may be open upon appeal

44.(1) Upon an appeal on any ground against an assessment, the Assessment Review Board or court, as the case may be, may reopen the whole question of the assessment so that omissions from, or errors in the assessment roll may be corrected, and the amount for which the assessment should be made, and the person or persons who should be assessed therefor may be placed upon the roll, and if necessary the assessment roll, even if returned as finally revised, may be opened so as to make it correct in accordance with the findings made on appeal.

12Section 44.(3) of the Act states:

Same 2009 and subsequent years

44.(3) 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.

THE BOARD’S ANALYSIS

MPAC’s Case

13Mr. Wishman relies on a Valuation Report. He stated that he inspected the Subject Property on September 7, 2017. As a result, the effective year of build was adjusted to 1964 to reflect the addition of 331 sq. ft. in 1975 and a negative 5% adjustment for a mass transit route to reflect the Subject Property’s location on a City bus route for a revised assessed value of $253,000. Mr. Wishman stated that he did give consideration to an adjustment for medium to heavy traffic. However, the City’s traffic counts on Lake Street do not warrant a negative variable adjustment for medium/heavy traffic. The whole street is considered to have light traffic and there is no negative variable adjustment applied for light traffic.

14The Subject Property is located in the southern central part of Sault Ste. Marie in a mainly residential neighbourhood of one and two storey single family homes.

15Mr. Wishman provided information on the sales of six properties. He submits that five of these properties, 78 Lake Street, 87 Retta Street, 9 Carmel Road, 98 Lewis Road and 81 Shannon Road, are similar to the Subject Property. They are similar in terms of total building area and effective age, all have a carport or a garage and all but one have finished basements. He also submits that the property at 83 Thorneloe Crescent is superior to the Subject Property as it is about 400 sq. ft. larger and it has been renovated and is newer with an effective year built of 1985. The Subject Property has 2.5 bathrooms whereas the sales comparables have 1-2 bathrooms. The Subject Property also has a shed. The time adjusted sales for the six properties range from $208,582 to $283,000. The revised opinion of current value of $253,000 for the Subject Property falls within this range.

16Mr. Wishman also prepared an Equity Analysis Report that considered the time adjusted sales of 30 single family detached homes that occurred within the period of January 1, 2015 to December 31, 2016 and that are within the Subject Property’s immediate neighbourhood.

17Mr. Wishman stated that the level of appraisal is established by determining the median Assessment to Sales Ratio (“ASR”) in the sales sample. The International Association of Assessing Officers (“IAAO”) standards state that the level of appraisal for all property types should fall between 0.90 - 1.10. In this instance, the sales sample produced a median ASR of 1.002 which is also within the target level of appraisal. The Coefficient of Dispersion (“COD”) is 14.2% which is below the IAAO standard of CODs of not more than 15% for residential properties.

18Mr. Wishman determined an equitable value by multiplying the revised opinion of current value of $253,000 by the level of assessment of 1.002 resulting in the value of $253,506. He submits that no equity adjustment is required under s. 44(3) (b) of the Act.

19Therefore, Mr. Wishman submits that the assessment should be reduced from $260,000 to $253,000 for the 2017 taxation year.

Appellant’s Case

20Mr. Kallio submits that the assessment for the Subject Property is still too high and should be assessed at $245,000.

21Mr. Kallio referred to several comparables, namely properties located at 138, 134, 119, 91, 158, 154 150 Mark Street and 154 Lake Street. Only two of these properties, the properties located at 119 and 91 Mark Street, had sales in October 2014 for $194,000 and in July 2014 for $195,000, respectively. Mr. Kallio states that these properties are all assessed lower than the Subject Property.

22Mr. Kallio expressed the opinion that 98 Lewis Road, included in MPAC’s sales comparables, is the most comparable property to the Subject Property.

23Mr. Kallio asserts that housing prices have dropped due to the poor economic climate in Sault Ste. Marie due to the uncertainty with Essar Steel/Algoma and Tenaris Tubes.

24He referred to two sample listings and a newspaper article in his evidence to show that the housing market is down and that average sale prices have been reduced. Also, he referred to an article about the redevelopment of a former hospital site into condominiums that has been put on hold due to poor local economic conditions.

25Mr. Kallio submits that the traffic pattern on Lake Street is not “light” due to the high volume of traffic including City buses and heavy trucks. Also, he purchased 15 feet of the adjacent lane from the City in 1999. However, the additional frontage has an easement and he cannot build on this property. He submits that this easement has not been taken into account.

Current Value

26The initial task of the Board is to use the best evidence available to determine the current value of the property as required by s. 1, s. 19.(1) and s. 44.(3)(a) of the Act.

27The 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 day or close to it. If, as in this case, no such transaction took place, 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 valuation date of January 1, 2016. The measure acts as a benchmark and a gauge of the accuracy for the assessed value of the Subject Property and comparable properties.

28To enable an estimate of value for the Subject 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, etcetera so as to enable a direct comparison to be made between a suggested comparable property and the Subject Property.

29The Board has considered the six sales in evidence. Key property details are summarized in the table below.

Address	Bldg. Area (sq. ft.)	Lot Size (acres)	YearBuilt	Renovation & Year	EffectiveYear built	Other	CVA	Sale (t.a.s.)
146 Lake Drive (subject property)	1,541	0.25	1961	397 sq. ft. added in 1975	1964	-Carport -Detached garage -Finished basement -Shed -5% -bus route	$253,000*	N/A
78 Lake Street	1,431	0.13	1953		1962	-Attached garage	$182,000	$208,582
87 Retta Street	1,247	0.24	1958		1964	-Carport -Finished basement	$217,000	$228,038
9 Carmel Road	1,207	0.16	1962			-Detached garage -Workshop Finished basement	$224,000	$243,226
98 Lewis Road	1,551	0.17	1965			-Carport -Finished basement	$227,000	$232,303
81 Shannon Road	1,563	0.27	1956			-Carport Finished basement	$238,000	$293,317
83 Thorneloe Crescent	1,936	0.22	1955		1985	-Carport -Finished basement	$283,000	$251,576

• Revised

30The Board finds the first five properties to be reasonably comparable to the Subject Property in terms of total building area and effective age, all have a carport or a garage and all but one have finished basements. Their time adjusted sales range from $208,582 to $293,317.

31As noted above, as a result of an inspection, Mr. Wishman determined that a negative 5% variable adjustment should apply due to the Subject Property’s location on a mass transit route. However, only one property, 78 Lake Street, is located on the same mass transit route as the Subject Property. Its sale value would have taken into account its location on this City bus route. It has a time adjusted sale value of $208,582. Applying 78 Lake Street’s time adjusted sale value per sq. ft. of $145.76 to the Subject Property’s total building area of 1,541 sq. ft. results in a value of $224,616 or $225,000 (rounded). This value falls within the range of time adjusted sales of $208,582 to $293,317. Given the Subject Property’s location on the mass transit route, the Board finds that its current value should be closer to the lower end of the range. Therefore, the Board sets the current value at $225,000 (rounded).

32The Board did not consider 83 Thorneloe Crescent as it finds that it is a superior to the Subject Property given its large total building area and its effective age of 1985.

33Mr. Kallio’s comparables only included two sales comparables, the properties located at 119 and 91 Mark Street. However, there were no time adjustment factors available to adjust the sales that occurred in 2014. Furthermore, the Board does not find these properties to be comparable given that they are much older having been constructed in 1953 as opposed to the Subject Property with an effective year built of 1964. Mr. Kallio was of the opinion that the property submitted by MPAC at 98 Lewis Road is the best comparable. The Subject Property’s current value of $225,000 is close to the time adjusted sale of $232,303 for 98 Lewis Road.

34The Board is satisfied that MPAC has considered the application of a negative variable adjustment for medium to heavy traffic. However, as stated by Mr. Wishman, the City’s traffic counts on Lake Street do not support, at present, a negative variable adjustment for medium to heavy traffic. The street as a whole is considered to have light traffic and there is no negative variable adjustment applied for light traffic. Mr. Wishman also stated there is no adjustment for the easement on the Subject Property. As noted above, he did determine that a negative 5% variable adjustment for being on a mass transit route should apply.

35Therefore, the Board sets the current value at $225,000.

Equity with Similar Lands in the Vicinity

36The Board must also consider the assessments of similar properties in the vicinity and determine whether the correct current value, as established, is inequitable relative to those assessments. If so, it should be adjusted to make it equitable, as required by s. 44.(3)(b) of the Act.

37For purposes of establishing equity, properties do not need to be comparable, they need to be of a similar nature and within a reasonable proximity. Considering an ASR analysis using a reasonable sample of property sales is one method for that purpose.

38Mr. Wishman also prepared an Equity Analysis Report that considered the time adjusted sales of 30 single family detached homes that occurred within the period of January 1, 2015 to December 31, 2016 that are within the Subject Property’s immediate neighbourhood. The sales sample produced a median ASR of 1.002. The Board finds the level of current value assessments of similar properties are in line with the level of sales in the vicinity.

39Therefore, the Board finds that the evidence does not support the conclusion that the current value of the Subject Property as determined above requires an equity adjustment under. 44(3)(b) of the Act.

CONCLUSION

40For these reasons and under s. 44.(3)(a) of the Act, the Board sets the current value of the Subject Property, as of the valuation day of January 1, 2016, at $225,000 and finds that there is no evidence leading to the conclusion that the current value, as determined above, is inequitable relative to the assessments of similar lands. It requires no further adjustment under s. 44.(3)(b) of the Act.

41Accordingly, for the 2017 taxation year, the assessment for the Subject Property is reduced from $260,000 to $225,000.