Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 18, 2018

FILE NO.: WR 152393

Assessed Person(s): Christine Musial, Andrew Musial

Appellant(s): Christine Musial, Andrew Musial

Respondent(s): Municipal Property Assessment Corporation, Region 16

Respondent(s): Township of Tiny

Property Location(s): 2 Nottawaga Drive, Plan 688 Lots 81, 82 and 83, PT

Municipality(ies): Township of Tiny

Roll Number(s): 4368-000-008-51401-0000

Appeal Number(s): 3259666 and 3320193 (deemed 2018 appeal)

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

Hearing Event No.: 696065

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

Heard: April 10, 2018 in Perkinsfield, Ontario

APPEARANCES:

Parties	Representative
Christine Musial and Andrew Musial	Christine Musial
MPAC	Zaid Al-Hillal Pam Hawkins
Township of Tiny	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

REASONS

Background

1Christine Musial and Andrew Musial (“the Appellants”) are the owners and assessed persons in connection with a seasonal recreational home municipally described as 2 Nottawaga Drive (“subject property”), in the Township of Tiny (“Township”). This is a single-family seasonal recreational home located on the shores of Georgian Bay on Nottawaga Beach between Wahnekewaning Beach to the north and Balm Beach to the south. The two-storey home is 5,027 square feet (“sq. ft.”) in size, situated on an acre and a half parcel in MPAC neighbourhood W23. The frontage on Georgian Bay is 173 feet.

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (“the Act”), the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2020 taxation years, the Municipal Property Assessment Corporation (“MPAC”) is required to assess this value as of the valuation day, January 1, 2016. (“current value).

3For the 2017 taxation year, which is under appeal, MPAC has assessed the subject property as having a current value of $2,100,000. The Appellants have appealed that assessment on the ground that it is too high. They submitted that an assessment of $1,555,639 would be correct.

4Pursuant to s. 40(11) of the Act, the Township is a party to these proceedings. The Township did not participate in the mandatory meeting; nor was a representative of the Township in attendance at the hearing.

5Section 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.

6MPAC takes the position that an equitable reduction is not required. The Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not an issue.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the 2017 and deemed 2018 tax years is $2,100,000.

Relevant 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(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:

19.2(1) Valuation days – Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows:

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.

11Section 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.

12Section 44.(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

13The only issue is what the correct current value of the subject property is for the 2017 and 2018 taxation years.

DISCUSSION, ANALYSIS AND FINDINGS

MPAC’S Evidence

14MPAC was represented by Ziad Al-Hillal, who also presented evidence for MPAC. He provided the Board with a copy of his Valuation Report for the subject property, along with an Equity Analysis Report.

15Mr. Al-Hillal described the subject property as having an improvement in the form of a residence which is 5,027 square feet (“sq. ft.”) in size, all of which is above grade. There is a 1,140 sq. ft. garage on the subject property. The location on Nottawaga Beach is described by Mr. Al-Hillal as an “exclusive area”.

16Mr. Al-Hillal chose the comparable sales method of valuation. For this appeal, he looked at the sales of 297 properties occurring in the vicinity of the subject property to determine the price trend between August 2013 and June 2017. He determined that the overall trend in the market had been an increase of 20.45% during the period in question. He then adjusted the sale values of his proposed comparable properties to arrive at sale price, if the sale had occurred on January 1, 2016. These amounts, called “time adjustment factors” (“TAFs”) are applied to all sales. The Appellants did not dispute the use of TAFs.

17Mr. Al-Hillal’s proposed comparable properties included seven properties, five of which are from areas quite near the subject property and two properties from the other side of the peninsula near the Town of Penetanguishene. The properties all sold reasonably recently, except 18 Coutnac Crescent, which sold in 2013. The particulars of the seven proposed comparable properties are contained in the following chart.

Table A: MPAC’s Proposed Comparable Sales

No.	Address	Sale Date	Sale Amount	Time Adjusted Sale Amount	Total Adjusted Sale Amount
1.	20 Nottawaga Drive	09/15/2016	$2,400,000	$2,320.641	$2,802,021
2.	36 Nottawaga Drive	09/10/2015	$1,670,000	$1,693,851	$2,209,701
3.	9 Nassau Court	10/30/2015	$1.425,000	$1,439,478	$1,439,478
4.	92 Tiny Beaches	11/25/2016	$1,550,000	$1,487,176	$2,003,026
5.	4 Lackie Crescent	12/04/2014	$1,330,000	$1,400,426	$1,881,806
6.	18 Coutnac Crescent	08/02/2013	$2,200,000	$2,484,920	$2,903,920
7.	85 McArthur Drive	05/24/2017	$2,242,500	$2,102,904	$2,251,904
Mean:			$1,831,071	$1,847,057	$2,251,694
Median:			$1,670,000	$1,693,851	$2,209,701

18Mr. Al-Hillal adjusted the sales to account for: less desirable areas in Sales #6 and #7; structure size differences in Sales #1 and #5; water frontage adjustment to Sales #2 and #4. This information was incorporated into a table entitled “Property and Comparable Sales Attributes Table”. The table shows that the properties have many different features, such as attached or detached garages ranging in size from 406 sq. ft. to 1,374 sq. ft., and secondary structures including bunkies, outdoor fireplaces, cabins, and boathouses. The water frontage dimensions differed extensively, from 229.12 feet (Sale #7) to 40 feet (Sale #2). The residential sizes were compared as well, with the subject property having the largest structure at 5,027 sq. ft. and the smallest comparable property having a structure measuring 2,176 sq. ft. (less than half the size).

19Because of the diverse sizes of the structures, the lands and the waterfront in the seven sales proposed by Mr. Al-Hillal, a “paired sales analysis” was used involving other properties in the vicinity with a view to determining the appropriate adjustments to make for the differences in the locations, water frontages and in the structures themselves. Paired sales analysis is an assessment tool which matches comparable properties and compares values that can be ascribed to certain features of those properties where other features are equivalent. In his examples, Mr. Al-Hillal used paired sales analysis of two properties, 34 and 36 Scott Lane. These properties, while less valuable and smaller all round than the subject property, were common to one another in features and age. One has 40 feet of waterfront; the other has 75 feet of waterfront. Many of their other features are equivalent (both are one storey in height, one has 4 bedrooms, one has 5). The difference in sale prices between the two properties was $171,950, and a portion of this value would be attributable to the size of the waterfront.

20Similarly, Mr. Al- Hillal used several other combinations of pairs of properties to determine other components of value. He compared 36 Nottawaga Drive with 174 Tiny Beaches Road North in order to determine the value of the structure size adjustment to be applied to the subject property. In this case, the two comparable properties are smaller than the subject property. Using their sale prices, he calculated that a per square foot value for the structure size that was supportable was $441.63 based on a difference of $481,380 in sale price. The two properties differ in size but have many other common features. Paired sales analysis gives MPAC a method of calculating the value of individual features.

21Mr. Al-Hillal’s conclusion, derived from the application of the adjustment factors as described above, was that the two most comparable properties were 18 Coutnac Crescent and 85 McArthur Drive, both of which are located on the other side of the peninsula. The total adjusted sale amounts for those properties were $2,903,920 for 18 Coutnac Crescent and $2,521,904 for 85 McArthur Drive. However, Mr. Al-Hillal used the average total adjusted sale price of these two properties ($2,712,912) and then applied $581,000 in reductions for the following negative site features: 15% for reductions made in the previous base year; 13% for an “unfinished allowance” (which means the structure was assessed at 87% of its contributory value to the subject property’s current assessment); 5% for abutting a public walkway; and 5% for abutting a campground. Regarding these last two reductions, these were made in addition to the 15% reductions made in the previous assessment cycle for these nuisances. This resulted in a value of $2,131,912, which was rounded to $2,100,000.

22Lastly, Mr. Al-Hillal expressed his opinion that some of the Appellants’ proposed comparable properties, including 739 Concession 15 West, 80 Addison Lane, and 725 Concession 15 West are invalid sales for comparison purposes, because they were either non- arm’s length sales, sales made under duress, or sales related to properties subject to a right-of-way which is not comparable to the subject property. Mr. Al-Hillal also asserted that, because there are significant discrepancies in lot sizes and these proposed properties not at all comparable to the subject property. He notes that one of the properties proposed by the Appellants, 30 Rowntree Lane, sold for a low price ($875,000), and he purchasers immediately applied for a demolition permit for the structure. He maintains that sale should not be considered for this reason.

MPAC’s Submissions

23Relying on Mr. Al-Hillal’s evidence, MPAC submits that the correct current value of the subject property is $2,100,000 as of January 1, 2016, for the taxation years 2017 and 2018.

24MPAC provided one decision to support Mr. Al-Hillal’s argument that it is not MPAC’s mass appraisal model which is the subject of the appeal, but rather the substantive result: Tiffin v. Municipal Property Assessment Corp., Region No. 15, [2013] O.A.R.B.D. No. 156. Mr. Al-Hillal concluded that the analysis of the available data supported a current value for the subject property of $2,100,000.

Appellant’s Evidence

25Ms. Musial gave evidence for the Appellants. She filed a number of exhibits, including a map of the entire peninsula showing the location of 24 residential properties that the Appellants propose as comparable properties to the subject property.

26In her evidence, Ms. Musial sought to show how the subject property had been granted certain allowances in the past but which had not been factored into the current assessment cycle. These adjustments, which she maintains are now discontinued, include an “unfinished” reduction of 13%, an “abuts nuisance” reduction of 15% and a further “abuts trailer camp/mobile home park” reduction in the amount of 15%. Ms. Musial submitted that these adjustments appeared in the last cycle but not in this cycle.

27Ms. Musial also set out details of seven proposed comparable property sales that she had researched. She sets out many of the factors she would like the Board to consider on a very detailed spreadsheet with 55 columns and approximately 40 rows.

28The following chart, Table B, sets out six of the seven properties that the Appellants suggest are the closest comparable sales to their home. The data of for these properties that are useful for comparison to MPAC’s evidence includes: the sale date, sale price, adjusted sale price (using MPAC’s time adjustment factors), the size of the home and the size of the lot and, lastly, the relative size of the waterfront.

TABLE B: Appellants’ Proposed Comparable Sales

Address	Date Sold	Distance from subject property	Selling Price $	Time adjusted Selling Price	Lot Size Sq. ft.	Residence Size Sq. ft.	Water-front (Feet)	Age In Years	Quality
Subject Property		0			65,314.4	5027	173	11	8
30 Rowntree Lane	09/15	33 feet	875,000	887,250	47,635.1	490	100.93	66	4
42 Scott Lane	02/12	1 mile	775,000	No data	26,086	1,674	130.19	34	6
180 North Shore Drive	04/15		3,350,000	3,467,250	620,730	6,631	732.69	12	9.50
38 Walker Road	10/15	0.5 mile	1,500,000	1,515,240	277,477.2	1,550	569.87	74	4
729 Concession 15 West	05/2015		1,025,000	1,056,775	70,567.2	3,057	190.66	16	7
80 Addison Lane	04/2015		1,150,000	1,190,250	120,1150	3,250	267	23	7

Note: There were insufficient particulars of the two sales of 739 Concession 15 West to use them as comparable sales.

29Ms. Musial submitted that many neighbours received a 25% discount for “abutting a nuisance” or “abutting a trailer/camp mobile home park”. Ms. Musial testified that the mobile home park/campground is closer to their home than to any other homes in the area. The Appellants also took the position that the presence of the beach access trail, allowing members of the public to access the beach, was not given a sufficient negative impact on value. One such access path is located next to the Appellants’ property; the second one is at the opposite end of the beach by 42 Scott Lane. Typically, this access also allows people to bring picnics onto the beach, with the usual problems of noise and trash.

Appellants’ Submissions

30The Appellants set out their submissions in a document entitled “2 Nottawaga Scenario Spreadsheet”. On this document Ms. Musial had set out the proposed values for the subject property after applying a series of adjustments. Then she recommended one of the proposed assessment calculations (Column E) or scenarios. Ms. Musial calculated that the land value alone of the subject property would be $959,081, by adding up the various features attributed to the land by MPAC. These features included the frontage (173 feet at $5,151.12), a base value of $7,208.18, the effective depth calculation of $43,229.89, $7,500 for the well and $10,000 for the septic system.

31To the land value, which was taken from a property valuation report generated by MPAC on December, 12, 2016, she added $1,059,247 described as the “Improvement Summary”, which is inclusive of a 13% discount for unfinished, and a “bulk adjustment”. To this, Ms. Musial added the value of the detached garages in the amount of $41,190 for a total of $2,059,519. From this value she applied a 25% reduction for the adjacent nuisances (public beach and access paths, proximity to trailer park/campground, a value of $514,879.75). In conclusion, the Appellants submit that the current value of the subject property is $1,544,639 as of the valuation day.

ANALYSIS AND FINDINGS

32When determining the correct value of a property such as a single-family recreational property in a desirable community, the best evidence would be an arms-length sale of that property at or near the valuation day. Where such a sale has not taken place, the acceptable technique is to consider the sale of comparable properties in the area surrounding the subject property that have been sold within a reasonable time either before or after the valuation day.

33Comparing recreational properties is always a challenge given the diversity of structures, landscapes and topography, shoreline length and quality, and other amenities.

34In this case, the subject property is a home that is larger in size than most of the proposed comparable homes, but it has some unfinished features along with proximity to certain public lands that detract from its value. It is unfortunate that the comparable properties proposed by the both parties are a diverse group of properties requiring many adjustments. While adjusting the value of various features is an accepted method of comparison, it is not an exact science. The more adjustments that are required, the more opportunity for error and the less opportunity for a compelling comparison.

35While both parties were forced to propose a diverse group of recreational properties to make their case, the Board prefers the evidence of MPAC. The comparable properties selected by MPAC were more consistent with the subject property in respect of overall value and the quality levels, while not exact, ranged between construction quality 9.5 and quality 6. The Appellants’ comparable sales properties, particularly the six set out on Table B above, ranged in quality from 9.5 to 4—a broader range, thereby increasing the possibility of error.

36The Appellants also chose comparable sales with a larger variety of site areas (ranging from 26,000 sq. ft. to 621,000 sq. ft.). MPAC’s selected comparable sales ranged in size from 0.3 acres (13,068 sq. ft.) to 3.16 acres (137,649 sq. ft.)—a smaller range than the properties proposed by the Appellants. Similarly, the water frontages in the Appellants’ comparable sales ranged from 101 linear feet to 733 feet, a 632-foot spread, while MPAC’s water frontages were 50 feet to 250 feet, a 200-foot spread.

37MPAC chose two properties that were on the opposite side of the peninsula near Penetanguishene. Mr. Al-Hillal adjusted for the fact that properties 6 and 7 were not in as desirable an area. However, he included these properties because they each had many features in common with the subject property, including waterfront and the building sizes. While their location is somewhat removed from the immediate neighbourhood, they proved to be acceptable comparable sales due to their other similarities to the subject property.

38The Board makes a decision based on the best evidence available. In cases such as this one, there are no perfectly comparable properties. However, using the best comparable properties available, and using the paired sales analyses to determine the appropriate adjustments to apply, the Board finds that MPAC has provided the most compelling evidence respecting the correct current value of the subject property. The Board finds that MPAC’s evidence was based on more appropriately-sized comparable properties as noted above. While the Appellants did a great deal of work in looking carefully at a large number of local properties, many of these properties were simply not comparable due to small size, less frontage, or non-arms’ length sales.

CONCLUSION

39The Board finds that the current value of the subject property is $2,100,000 and confirms the assessment for taxation year 2017.

2018 DEEMED APPEAL

40An appeal for the 2017 taxation year is presently before the Board. Section 40.(26) of the 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.

41Section 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.