Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 5, 2018 FILE NO.: WR 151795

Assessed Person(s): Susan Lorna Rousseau Appellant(s): Susan Lorna Rousseau Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 17 Respondent(s): Township of Georgian Bay

Property Location(s): 3278 Go Home Lake Shore Municipality(ies): Township of Georgian Bay Roll Number(s): 4465-020-018-10600-0000 Appeal Number(s): 3256800 and 3309008 (deemed 2018 appeal) Taxation Year(s): 2017 and 2018 (deemed appeal) Hearing Event No.: 694871

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

Heard: February 27, 2018 by teleconference call

APPEARANCES:

Parties	Representative
Susan Lorna Rousseau	Self-represented
MPAC	Sue Hummel, Terri Mclean
Township of Georgian Bay	No one appeared

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1The subject property was assessed by MPAC as a Seasonal/Recreational Dwelling - First Tier on Water built in 1965, with construction quality of 6.0. It has an actual frontage of 177 square feet (“sq. ft.”) and an effective frontage of 165 sq. ft. The lot area measures 1.27 acres. The building total area is 1,629 sq. ft. The unfinished basement area is 979 sq. ft., 572 sq. ft. of this is an unfinished basement garage built in 1965 with construction quality of 3.0. The subject property is a water access cottage, it can only be accessed by boat; there is no road access.

2For the 2017 taxation year, the current value assessment (“CVA”) was returned at $474,000. Sue Hummel, MPAC’s assessor presented five comparable property sales of water access only properties. She submits that based on the sales of the most similar properties she estimates the current value of the subject property at $474,000.

3Susan Rousseau, the Appellant, submits that the assessment is too high and it does not reflect the market value based on the assessed values of properties she considers similar to the subject property and sales of water access only properties in MPAC’s evidence. She submits that the current value should be $320,000.

ISSUES

4The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 and deemed 2018 taxation years?

ii.) Is the current value as determined by the Assessment Review Board (“Board”) equitable in reference to the assessments of similar lands in the vicinity?

DECISION

5The Board determines that the current value of the subject property for the 2017 and deemed 2018 taxation years to be $470,000.

6The Board reduces the assessment as returned for the 2017 and deemed 2018 taxation years from $474,000 to $470,000 and further determines this to be equitable with the assessment of similar lands in the vicinity.

REASONS FOR DECISION

Current Value – Evidence and Analysis

7In accordance with s. 44.(3)(a) the first mandate of the Board is to determine “the current value of the land.” Section 1 of the Assessment Act (“Act”) defines current value 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, for the 2017 and deemed 2018 taxation years, the Board must determine what the subject property would have sold for in an arm’s length transaction on the January 1, 2016 valuation day set by the Act.

8Section 19.2(1) of the Act prescribes the valuation days, which provides:

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.

9Section 40.(17) of the Act places “the burden of proof as to the correctness of current value on MPAC.”

MPAC’s Evidence

10Ms. Hummel presented the Board with five water access only comparable property sales, which she testifies are in proximity to the subject property. All the comparable property sales are on the same lake as the subject property “Go Home Lake Shore” but they have different exposures, south, east and north exposure, while the subject property has a western exposure, which she testifies as being more superior and would command a higher sale price. Ms. Hummel further submits that although Sale 3 is on the same lake as the subject property, it is on the Musquosh River portion. Ms. Hummel submits that while this location is inferior to the subject property, this comparable sale has an effective year built of 2004, it has a superior building size, with a cabin and a gazebo, thus making it superior to the subject property.

11Details of the five comparable property sales are summarized in Table 1 below:

Table 1

Property	Address	Assessment ($)	Sale Date / Sale Amt. ($)	Time / Adjusted Sale ($)	Building/Size (“sq. ft.”)	Lot Size (“A”)	Year Built/ Effective Year Built	Construction Quality	Exposure
Subject Property	3278 Go Home Lake Shore	474,000	N/A	N/A	1,629	1.27	1965	6.0	West
Sale 1	9876 Go Home Lake Shore	441,000	Dec. 2013 (432,000)	446,576	1,334	0.97	1963/1987	6.0	South
Sale 2	9904 Go Home Lake Shore	576,000	Oct. 2014 (559,000)	569,849	1,882	1.33	1960/2001	6.5	South
Sale 3	305 Musquosh River Shore	518,000	June 2014 (500,000)	512,547	2,169	1.22	1978/2004	6.0	East
Sale 4	9586 Go Home Lake Shore	416,000	Aug. 2015 (500,000)	503,193	1,276	0.95	1960/1992	5.5	East
Sale 5	9344 Go Home Lake Shore	546,000	Oct. 2014 (555,000)	565,772	1,587	1.02	2009	7.0	North

12Ms. Hummel submits that Sale 1 is considered inferior to the subject property due to its southern exposure, building size and the fact that it has no basement and no secondary structure. Sales 2 and 5 are superior to the subject property due to the building size, construction quality, age and they both have cabins. She considered Sales 3 and 4 similar to the subject property. Sale 3 has a more inferior location but she testified that this has been accounted for in its bigger building size, while Sale 4 also has an inferior location but has been accounted for in its age and the fact that it has a cabin.

13Ms. Hummel concludes her evidence by stating that based on the sales of the properties similar to the subject property, she estimates the CVA of the subject property at $474,000 as reasonable.

Appellant’s Evidence

14Ms. Rousseau testified that although the subject property has a western exposure, it is located on the north end of Go Home Lake Shore, which commands a lower sales price, compared to properties on the south end of Go Home Lake Shore. She testified that the subject property was assessed at $390,000 in the last base year and this increase of 22% from the previous base year does not reflect the CVA increase in the neighborhood, which is 4.4%. She questioned the sales MPAC used for time adjustment factors as these sales includes road access properties which are more highly priced than water access only properties.

15Ms. Rousseau presented the Board with the comparables she submitted to MPAC for a Request for Reconsideration (“RFR”) which included the listing prices for 2 properties: 41 Toldholm Drive, Port Carling Ontario, located in the Town of Bala, listed at $299,000 and 1018 Whites Road Glen Orchard Ontario, listed at $279,000, and the assessed values of five properties.

16She initially submitted that the average assessed value for these seven properties is $280,000 and this is what the subject property should be assessed at. Upon proper calculation during the hearing, Ms. Rousseau admitted that the corrected average of the seven properties is $308,285. She later submitted that the CVA of the subject property should be $308,285.

17Ms. Rousseau further presented 12 properties which she believes are comparable to the subject property to establish that the subject property is over assessed. Six of these properties have no valid sales between January 1, 2012, to December 31, 2015. Two have sale dates in May 2013, and four have sales dates between June 2014 to December 2015.

18Ms. Rousseau further analyzed MPAC’s evidence in Appendix B of the valuation report, which are 151 sales used by MPAC to establish price change over time. She argues that the 151 property sales used in MPAC’s Sales Ratio Trend Analysis (“SRTA”) to study the effect of time on sales prices to produce time adjusted factors used to provide Time Adjusted Sales (“TAS”) prices included 50% of properties with road access and this makes the data skewed since her property is only accessible by water. Ms. Rousseau further testified that she used a map provided by the Town to identify which properties are road accessible and removed them and used solely water access only properties to establish an average of the water accessible only properties to obtain an average of $320,110. She submits that it would be fair to establish the CVA of the subject property at $320,000 (rounded).

Board’s Analysis

19The best evidence of current value is the sale of the subject property on or near the valuation date of January 1, 2016. When no such sale occurs, as in this appeal, the Board looks to the recent sale of other similar properties in the vicinity to determine current value. The Board prefers sales of comparable properties within 12 months on either side of the valuation date of January 1, 2016, although the Board can also go as far back as 18 months on either side of the valuation date of January 1, 2016. The caution being that the further a sale is from the valuation date, the less likely it reflects the market value on the valuation date.

20Ms. Rousseau’s evidence regarding the properties used for her RFR does not provide any property details needed to establish if these properties are comparable to the subject property. During cross-examination she admitted that she did not know that 41 Toldholm Drive, Port Carling, Ontario and 1018 Whites Road, Glen Orchard, Ontario, which had listing prices, were in the Township of Muskoka Lake and not on water. Furthermore, she provided the listing prices for these two properties and not the sale prices. The other five properties are assessed values and not sales. There are no property details of these properties and furthermore without the sale amount the Board is unable to determine if these five properties were assessed at their current value.

21Ms. Roussesu also testified that there is a 22% increase on the subject property from the last base year. During cross-examination and upon her verifying her assessment record, she confirmed that $390,500 was the phase in value for 2013 and that the CVA for the last base year (2012) was $479,000. The 2012 CVA is $5,000 higher than the returned CVA for 2016.

22Ms. Rousseau submits that the current value of the subject property should be $320,110 based on her calculation of the average sales of water access only properties in MPAC’s evidence of 151 sales used in price change over time. She did not provide the Board with details of these properties for the Board to determine their comparability to the subject property. During cross-examination, when asked if all things being equal will a bigger cottage in terms of size sell higher than a smaller one she stated that it depends on the location and exposure and emphasized that MPAC has overlooked this issue by using both water access only and road access properties. Furthermore, during MPAC’s cross-examination, Ms. Rousseau asked Ms. Hummel what will happen if all the road access cottages were taken off its Sales Ratio Trend Analysis (“SRTA”) and water access only cottages were used, Ms. Hummel stated that she does not have that information.

23Furthermore, during cross-examination Ms. Hummel admitted that both water and road access cottages were used in its SRTA to determine how cottages are doing in the market and in order to have enough sales, both water and road accessible cottages were used. Ms. Hummel further admitted that water access only cottages are assessed lower than road access cottages.

24The Board agrees with Ms. Rousseau that water access only properties should also be compared with other water access only properties, especially when MPAC has admitted that water access only cottages are assessed lower than road accessible cottages. However, in establishing the current value of the subject property, MPAC used solely water access only comparable properties. MPAC’s data on price change over time was used to establish the overall condition of the market.

25In determining the current value for the subject property, the Board reviewed the properties in the five comparable sales presented by MPAC and the only six sales out of the 12 comparables presented by the Appellant. The Appellant did not provide details about the exposures of these six properties; therefore the Board could not use this as a factor in determining their comparability with the subject property. Furthermore, the Appellant did not furnish the Board with market evidence to show that properties located on the Northern end of Go Home Lake Shore sells for less than other properties located on east, west or south ends. The Board determines that MPAC’s Sale 1, which sold on December 2013, the Appellant’s Sale 1 - 3046 Go Home Lake Shore and Sale 4 - 3186 Go Home Lake Shore, which both sold in May 2013 are too far removed from the valuation date of January 1, 2016.

26The Board further categorized the remaining eight comparable property sales from the parties into either inferior, relatively comparable, and superior properties, in order to establish the current value range of the subject property. The Board determines that the Appellant’s Sales 2, 3, and 6 are inferior to the subject property based on their building size which has a range of 782 - 949 sq. ft. The Sale 2 property is four years older than the subject property building and has a quality of construction of 4.0 and effective site area of 0.66 acres. The Sale 3 property building is 21 years newer than the subject property building with the same construction quality of 6.0, it has no half bath like the subject property, it has three bedrooms while the subject property has four bedrooms and it has no basement area as the subject property. The subject property building is also 680 sq. ft. larger than this sale. The Sale 6 property building is seven years older than the subject property building with quality of construction of 5.0. Its building site area of 1.05 acres is smaller than the subject property. It has no half bath and it has three bedrooms. Its basement area and building size is smaller than the subject property building.

27MPAC’s property Sales 2, 3 and 5 are determined to be superior to the subject property. Their building sizes are larger excluding Sale 5, which is 42 sq. ft. smaller than the subject property but it is 44 years newer than the subject property building. They have cabins as secondary structures and in addition Sale 3 has a gazebo. Only Sale 5 has a basement area which is larger than the subject property. The effective year built of these superior property sales range from 2001 to 2009 with construction quality ranging from 6.0 to 7.0.

28The Board determines that MPAC’s property Sale 4 and the Appellant’s property Sale 5 are relatively comparable to the subject property. These two properties are on the same lake as the subject property. Although Sale 4 has an eastern exposure which MPAC submits is inferior to the subject property, it has an effective year built of 1992, with construction quality of 5.5 with a building size of 1,276 sq. ft. and site area of 0.95, with a cabin. The Appellant’s Sale 5 has a larger site area of 1.42, but it is five years older than the subject property, its building size is 279 sq. ft. smaller than the subject property with three bedrooms and it has no basement area.

29The Board determines the CVA of the subject property based on the current value range established by these two relatively comparable sales. As illustrated in table 2 below:

Table 2

Subject Property’s Current Value Range Established by the Relatively Comparable Sales

Sale 5 (Appellant) ←$448,360

Sale 4 (MPAC) $503,193→

30The mid-point of the current value range is $475,776. This current value was determined based on the TAS prices of Sale 4 (MPAC) and Sale 5 (Appellant). MPAC admitted to using both water access only properties and road accessible properties to establish their TAS price, which was objected to by Ms. Rousseau. Consequently, the Board also used the sale prices of these two sales to determine the current value of the subject property, since neither party questioned the validity of these sales in open market which sold at $500,000 (MPAC’s Sale 4) and $440,000 (Appellants Sale 5) respectively. The mid-point of the range using the sale prices of these two sales is $470,000. This amount is not far removed from the current value range using the TAS price of these two sales.

31The Board notes that the usual practice is to time adjust the sale prices of these two sales in order to reflect their value on the valuation date of January 1, 2016. However, Ms. Hummel admitted during cross-examination that the 151 sales used in the SRTA included road access properties, and that water access only properties are accessed at a lower level than road access properties. Consequently, in this appeal the Board used the sales prices of Sales 4 and 5 to determine the current value of the subject property.

32The Board determines that the correct current value of the subject property is $470,000.

Equity Analysis

33Section 44.(3)(b) mandates and directs that after determining current value, the Board shall 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.”

34The Assessment to Sales Ratio (“ASR”) is a tool often used to determine if a reduction in the assessment below current value is required to make an assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the TAS price.

35Ms. Hummel presented an equity analysis of 30 Single Family Detached on Water and Seasonal/Recreational Dwelling – First Tier On Water from January 2013 to December 2016, within 3.9 kilometers of the subject property. She submits that these properties have a median ASR of 0.965, which is in line with the International Association of Assessing Officers standards, which state that the median ratio should fall between 0.90 and 1.10. Furthermore, that MPAC’s position is that equity is achieved if the median ASR falls between 0.95 and 1.05. She concludes that based on this analysis, an equity adjustment is not required.

36The Appellant did not provide any equity argument.

37For establishing equity, properties need not be as similar as they need to for valuation purposes; however, they need to be of the same general nature, character or function. The Board had determined based on Ms. Rousseau’s submission, and MPAC’s admission that MPAC’s sales used for SRTA which was used for time adjustment data included sales of water access and road access properties and is therefore flawed. In MPAC’s equity analysis, Ms. Hummel has used 30 sales of properties on the same lake as the subject property, however used the time adjusted factors from the sales of both water access and road access properties to establish their TAS prices in order to provide the Board with the median ASR. The Board notes that the usual practice is to provide the TAS prices of these properties in order to determine what they would have sold for on the valuation date of January 1, 2016, however, due to MPAC’s admission of using sales of both water and road accessible properties to establish their TAS prices, the Board used their sales prices. Using the sale prices of the 30 sales in MPAC’s equity analysis, the median ASR as determined by the Board is 0.977. This reveals that MPAC has been assessing properties in the subject properties’ vicinity at or near their sales prices.

38This evidence does not lead the Board to the conclusion that the assessment of the subject property should be reduced below its current value to make it equitable with the assessments of similar lands in the vicinity.

CONCLUSION

39Based on all of the evidence, the Board determines the correct current value to be $470,000.

40The Board reduces the assessment as returned from $474,000 to $470,000 for the 2017 and deemed 2018 taxation years and finds this value to be fair and equitable.

2018 DEEMED APPEAL

41An appeal for the 2017 taxation year is presently before the Board. Section 40.(26) of the Assessment Act provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2017 appeal before March 31, 2018. For that reason, this decision also applies to the 2018 taxation year.

42Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

(26) For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,

(a) in relation to the assessments under sections 32, 33 and 34 for the year; and

(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.