Fiona Gilligan v. Municipal Property Assessment Corporation, 2018 CanLII 55820

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 14, 2018

FILE NO.: WR 152644

Assessed Person(s): Fiona Gilligan

Appellant(s): Fiona Gilligan

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 03

Respondent(s): City of Ottawa

Property Location(s): 684 Echo Drive

Municipality(ies): City of Ottawa

Roll Number(s): 0614-052-801-87200-0000

Appeal Number(s): 3256798, 3276655, and 3289500 (deemed 2018 appeal)

Taxation Year(s): 2017 and 2018 (deemed appeal)

Hearing Event No.: 696274

Legislative Authority: Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: April 11, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Fiona Gilligan	John Clark
MPAC	Marie Smith
City of Ottawa	No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

PRELIMINARY MATTERS

1The Assessment Review Board (“Board”) has before it three appeals for this property, located at 684 Echo Drive, Ottawa. One appeal was made under s. 40 of the Assessment Act (“Act”) for the 2017 taxation year, a second was made under s. 34 of the Act effective May 1, 2017, the third is a deemed appeal for the 2018 taxation year because the 2017 was not finally disposed of before March 31, 2018. MPAC issued the supplementary assessment in the amount of $875,000 effective May 1, 2017. At the outset of the hearing Marie Smith, representing MPAC, testified that the supplementary assessment should not have been made. She believes the supplementary assessment was triggered by a change in value, which occurred internally at MPAC, and was later corrected. She confirmed that no changes occurred to the property in 2017 that would cause a supplementary assessment. Based on Ms. Smith’s uncontested testimony, I dismiss the supplementary assessment appeal number 3276655.

INTRODUCTION

2The remaining appeals are of the assessed value for the 2017 and 2018 taxation years. MPAC recommends that the assessment of $1,994,000 be reduced to $1,637,000. Fiona Gilligan, the Appellant, takes the position that the property’s assessment should fall in the range of $1,334,000 to $1,450,000.

3Section 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, I must determine what the property would have sold for in an arm’s length transaction on the valuation day, which in this case is January 1, 2016 for the 2017 taxation year.

4Once I have determined the current value, s. 44.(3)(b) requires that I “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 current value.

DECISION

5Appeal Number 3276655 is dismissed.

6For the reasons stated below, I find that the current value of the subject property, as of the January 1, 2016 valuation day and for the 2017 and deemed 2018 taxation years, is $1,479,000. The evidence demonstrates that, pursuant to s. 44.(3)(b), this value is equitable with that of similar properties in the vicinity.

7Accordingly, the assessment as returned for the 2017 and 2018 taxation years is reduced from $1,994,000, as returned, to $1,479,000 in the Residential property class.

Current Value

Description of the Subject Property

8The subject property is a single family detached dwelling located between the Rideau Canal and the Rideau River in an area of Ottawa known as Old Ottawa South. It sits on an unusually shaped lot that fronts onto Echo Drive and backs onto Riverdale Avenue near the point where these two streets converge. Colonel By Drive and Echo Drive separate the subject property from the Rideau Canal, however there is a view of that canal from the subject property. There is a public walkway abutting the property as well as a small city-owned lot.

9The original dwelling on the subject property was demolished and replaced, using the same building footprint. The new building was occupied in 2015, although finishing work continued until the spring of 2017. MPAC’s data shows that the building has three storeys measuring 3,201 square feet (“sq. ft.”) with 1,240 sq. ft. of basement area. MPAC’s assessment as returned is based, in part, on an 8.5 quality of construction.

Level of Assessment

10Following an inspection of the subject property Ms. Smith made two downward adjustments to the assessed value and is recommending a current value of $1,637,000. These two adjustments are 1) applying an assessment to sale ratio (“ASR”), which she identified as a Time Adjustment Sale Ratio, based on sales of six properties and 2) changing the quality of construction from 8.5 to 8.0 which came as a result of her inspection of the subject property.

11In support of the ASR adjustment, Ms. Smith presented six sales of properties that are 2.5 or 3 storeys tall, single family detached that are not on water with a 7.5 to 8.5 quality of construction and 2,500 to 3,500 sq. ft. of building area (see Table 1, below). She reviewed the characteristics of each sale (lot size, building size, quality of construction, number of bedrooms, bathrooms and fireplaces and whether they had air-conditioning) identifying each as either inferior, superior or similar to the subject property. Missing from this data are the ages of the structures and whether or not they have a water view. She calculated a 10% reduction based on the level of assessement of those comparable properties. That factor was calculated as follows:

• The average ASR for the six sales is 1.1133

• 1/1.1133 = 90%

• The difference between 90% and 100% is 10%

Table 1

	Address	House Size (sq. ft.)	Lot Size (Acre)	Quality of Construction	Distance from Subject	Time Adjusted ASR	Time Adjusted Sale Price $
Subject	684 Echo Drive	3,211	0.12	8.0
1	696 Echo Drive*	2,925	0.2	8.0	0.1 km	1.3031	1,134,991
2	42 Hopewell Avenue	2,897	0.05	8.0	0.73 km	1.1585	1,088,475
3	35 Douglas Avenue	2,629	0.07	8.0	4.83 km	1.0235	1,220,000
4	59 Fifth Avenue	2,752	0.06	7.5	0.73 km	1.1047	1,009,354
5	260 Carleton Avenue	3,954	0.11	7.5	5.00 km	1.0891	1,182,679
6	37 Eccles Street	2,717	0.06	7.5	2.67 km	1.0077	961,595

*During the hearing it was determined that 696 Echo Drive has a water/canal view.

12Ms. Smith identified Sales 1 and 6 as inferior, Sales 2, 3 and 4 as similar and Sale 5 and superior to the subject property.

The Comparable Sales

13John Clark, the Appellant’s representative, challenged Ms. Smith’s analysis of her sale properties. He argued that because Ms. Smith identified each sale as superior, similar or inferior to the subject property then the subject property’s value should fall within that range of sale prices; between $976,000 to $1,250,000 for the non-time-adjusted sale prices or between $962,000 to $1,182,000 for the time-adjusted sale prices. He further submitted that Ms. Smith identified Sale 5, 260 Carleton Avenue, as superior to the subject property, that it’s time-adjusted sale price was $1,182,679 yet Ms. Smith is seeking a value that is 40% higher. He agreed with Ms. Smith that 37 Eccles Street is inferior and argued that the time adjusted sale price of $961,595 is too low in relation to the subject property. He concluded that, based on MPAC’s sales data, the subject property’s current value should fall between $1,009,000 to $1,216,000 but that it should not exceed the higher end of the range.

14Ms. Smith stated she is only relying on the assessment to sale ratios and the values of the sales were not relevant.

15Ms. Gilligan and Mr. Clark also expressed their concerns regarding the location of Ms. Smith’s sales noting that Sales 3, 5 and 6 are located a distance from the subject property and that all of the sales except Sale 1 are outside of the Old Ottawa South neighbourhood and that only Sale 1 has a water/canal view. Mr. Clark testified that the Old Ottawa South and East neighbourhoods are a unique market from other neighborhoods in Ottawa. He argued that a water/canal view is a driving force of value and that there are sufficient sales within those neighbourhoods to provide comparable sales.

16Mr. Clark and Ms. Gilligan submitted 10 sales, all located in Old Ottawa South, see Table 2. Eight of the 10 sales have a canal/water view. The sales were time-adjusted using MPAC’s Time Adjustment Factors. The time adjusted sale prices range from $655,200 to $2,148,905. Mr. Clark identified Sales 1 through 4 are superior to the subject property and the remainder are inferior. None were identified as similar. All have water/canal views except for Sales 6 and 9. Unfortunately, no descriptive data was included, such as the age of the structures, lot and building sizes, quality of construction, number of storeys, etc.

Table 2

	Address	Water or Canal View	Assessment	Sale Price	Sale Date	Time Adjusted Sale Price
1	894 Colonel By Drive	Yes	New building, no assessment	1,976,991	August 2017	1,838,603
2	1 Grosvenor Avenue	Yes	1,944,000	2,195,000	July 2016	2,148,905
3	864 Colonel By Drive	Yes	1,388,000	1,675,000	March 2017	1,584,550
4	720 Echo Drive	Yes	1,359,000	1,660,000	July 2017	1,553,760
5	32A Brighton Avenue	Yes	985,000	1,199,000	December 2016	1,149,841
6	61 Aylmer Avenue	No	1,032,000	1,197,500	September 2016	1,159,180
7	7 Rosedale Avenue	Yes	1,039,000	1,185,000	September 2017	1,096,125
8	686 Echo Drive	Yes	904,000	700,000	July 2017	655,200
9	24 Aylmer Avenue	No	1,091,000	1,325,000	September 2015	1,344,875
10	681 Echo Drive	Yes	1,037,000	1,375,240	November 2016	1,325,731

17Although MPAC’s sales data indicate a current value of approximately $1,200,000, both Mr. Clark and Ms. Gilligan felt this value was too low. Based on his sales data, Mr. Clark proposed a current value range of $1,450,000 to $1,550,000 but felt it should not exceed the upper end of that range.

Board’s Analysis

18The level of assessment is rarely used to determine current value. In addition, there is no need to use the level of assessment or the ASR in determining current value when there are sales of comparable properties. By using the level of assessment to determine current value Ms. Smith is saying that MPAC is making a consistent kind of error in assessing this type of property and that this error was also made in assessing the subject property. She is arguing that I should rely on particular errors in the returned assessments, however what is in dispute here is the returned assessment of this property. The level of assessment of other properties does not indicate what this property would likely sell for on the valuation day. Therefore, I am not relying on Ms. Smith’s ASR calculations for current value.

19I accept the Appellant’s argument that the subject property is located in a niche market and, therefore, sales in that market are better indicators of value. I also accept the Appellant’s argument that a water/canal view is an influential factor in value. Therefore, I find that the best indications of market value for the subject property are sales in the vicinity of the subject property with water/canal views.

20The Appellant provided 10 sales of properties in the vicinity of the subject property, 8 of which have a water/canal view and MPAC presented one sale, located very near the subject property with a water/canal view.

21I accept Ms. Smith’s argument, made during the hearing, that 686 Echo Drive is not comparable to the subject property because it was assessed as a duplex. As a result, I am disregarding this sale.

22The remaining eight sales have a median sale price of $1,440,000 (rounded) and an average sale price of $1,479,000 (rounded). The higher of these amounts falls within the Appellant’s estimated current value. Accordingly, I find that the current value of the subject property is $1,479,000.

EQUITY

23I must also consider the assessments of similar properties in the vicinity and determine whether the current value of $1,479,000 is inequitable relative to those assessments. If so, the current value should be adjusted to make it equitable, as required by s. 44.(3)(b) of the Act.

24For the purpose of establishing equity, properties do not need to be directly comparable however they need to be of a similar nature and within a reasonable proximity to the subject property.

25MPAC submitted an Equity Analysis Report which looked at the level of assessment of 30 single family detached residential properties (Not On Water) located within 5 kilometres of the subject property and which sold between January 1, 2012 to October 30, 2017. These sales were time-adjusted to the January 1, 2016 valuation day. Ms. Smith identifies 1.067 as the level of appraisal (also known as the ASR) and concludes no adjustment is required for equity. The 1.067 was the median ASR of her 30 sales. I have two concerns with this analysis. The first is the range of sale dates. As mentioned above, the farther the sale date is from the valuation day, time adjustments are likely less accurate. For this reason, I find the time adjustments for the outlying sales, particularly those that occurred in 2012 and 2013 may not be reliable. The second issue is the evidence submitted by the Appellant which shows eight of the assessments in MPAC’s Equtiy Study are incorrect because the assessed values on the report differ from the assessed values on MPAC’s Propertyline online database. Consequently, I find I cannot rely on MPAC’s Equity Analysis Report.

26The Appellant and Mr. Clark argued that their ten sales should be used to determine equity because they are in close proximity to the subject property, most have water/canal views and are have similar values.

27At the hearing, it was determined that one of the sales, 686 Echo Drive, was assessed as a duplex rather than a single family detached property. Another sale, 894 Colonel By Drive, did not have an assessment. Therefore, I am disregarding both of those sales. In addition to the eight remaining sales presented by the Appellant, I added MPAC’s Sales 1, 2 and 4 as they are located in the vicinity of the subject property. The average time-adjusted ASR for these eleven properties is 0.96 which I find is an acceptable variable from 1.00.

28Accordingly, I find that an adjustment for equity is not required.

CONCLUSION

29I find that the current value of the subject property, as of the January 1, 2016 valuation day, is $1,479,000 for the 2017 and 2018 taxation years. I also find that no adjustment is required to make the current value equitable.

30Accordingly, for the 2017 and 2018 taxation years, the assessment is reduced from $1,994,000 to 1,479,000.