Hipel v. Municipal Property Assessment Corporation, 2018 CanLII 76064

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: August 08, 2018

FILE NO.: WR 152192

Assessed Person(s): Tracy Allen Hipel, Sharon Yvonne Hipel

Appellant(s): Tracy Hipel, Sharon Hipel

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 21

Respondent(s): City of Cambridge

Property Location(s): 562 Grand Valley Drive

Municipality(ies): City of Cambridge

Roll Number(s): 3006-120-003-10100-0000

Appeal Number(s): 3249415 and 3311387 (deemed 2018 appeal)

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

Hearing Event No.: 694564

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

Heard: March 02, 2018 in Cambridge, Ontario

APPEARANCES:

Parties	Representative
Tracy Hipel, Sharon Hipel	Self-represented
MPAC	Tony Pileggi, Carianne Hotson
City of Cambridge	David Hotson, Kendra Scholl

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS AND DAN WEAGANT

INTRODUCTION

1The subject property located at 562 Grand Valley Drive has a current value assessment of $274,000 for the 2017 taxation year. The owner, Tracy Hipel (“Appellant”) believed the value to be too high when compared to other properties in the same neighbourhood. After participating in an unsuccessful Request for Reconsideration process with MPAC, Mr. Hipel appealed this assessment to the Assessment Review Board (“Board”). He believes the correct assessment of the subject property is $259,000 and should reflect a reduction for the proximity of the subject property to an existing contaminated site and the existence of an in-ground venting system and Soil Vapour Extractor (SVE) on the property.

2MPAC’s position is that the subject property would have a current value of $305,000 were it not for the presence of the in-ground venting system and the SVE and associated shed. To reflect the impact of these elements on the subject property, MPAC applied a 10% reduction from the $305,000 figure to arrive at a returned value for 2017 of $274,000.

3The parties agree as follows:

• The current value of the subject property is $305,000 without the reductions for the SVE and other contamination mitigation works; and

• A reduction of this value is necessary to reflect the impact of the SVE and the in-ground venting on the property.

4The dispute lies in the amount of the reduction for these characteristics. MPAC applied a 10% reduction for 2017. The City agrees with MPAC. The Appellant believes the reduction should be 15%.

5The Board must decide two things in this appeal. Firstly, the current value of the subject property must be determined, and the impact of the presence of the SVE and associate venting work on current value. Having reference to the assessments of similar properties in the vicinity, the Board must also determine if the current value found, needs to be reduced for the purpose of equitable assessment.

6Section 40.(26) of the Assessment Act, (“Act”) states 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 did not dispose of the 2017 appeal before March 31, 2018. For that reason, this decision also applies to the 2018 taxation year.

DECISION

7The Board finds the current value of the subject property is $259,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

8Accordingly, the assessment of 562 Grand Valley Driver for the 2017 taxation year is reduced from $274,000 to $259,000, in the Residential property class. This same result applies to the deemed 2018 taxation year.

LEGISLATION

9In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act (“Act”).

10Section 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.

11Section 19.(1) of the Act states:

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

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.

What is the Current Value of the Subject Property?

MPAC’S Evidence and Position

13MPAC’s position of value is derived from a direct comparison valuation study undertaken by Carianne Hotson, an assessor with MPAC. Ms. Hotson testified that no other properties in the area that have an SVE on site have sold at or near the valuation day of January 1, 2016. In order to arrive at a selection of comparable properties, Ms. Hotson used six sales of properties in the same ‘Northstar’ contamination area of the City. None of these comparables have an SVE, but they are all considered to be affected by the Northstar contamination.

14Ms. Hotson used these six sales to come up with a reasonable range of current value for the subject property by making adjustments to the sale prices of the comparables for things like the difference in age, size, location and condition or quality class. She testified that by making these comparisons and adjustments she arrived at her opinion of current value of $274,000 which includes a reduction of 10% from the value determined, to reflect the impact of the presence of the SVE on the subject property. Ms. Hotson testified that the ‘starting value’ before the 10% reduction was $305,000.

The City’s Evidence and Position

15The City was represented by David Hotson, who submitted additional sales to support the unadjusted sale value of comparable properties of $305,000. Mr. Hotson agreed with MPAC that a 10% reduction for the presence of the contamination equipment on the subject property was reasonable and supportable by the sales evidence.

Appellant’s Evidence and Position

16The Appellant had no issue with either the approach taken by MPAC, or the value determined, before the reduction for the presence of the SVE on the subject property. He viewed the starting value of $305,000 to be reasonable. However, instead of a 10% reduction as applied by MPAC for the presence of the SVE, the Appellant believes this reduction should be 15%.

17Employees of the Ministry of the Environment and Climate Change make regular visits to the property to take samples and readings from instruments and containers that are inside the SVE shed. From time to time these containers are removed and replaced. The Appellant submitted that this activity has an impact on the quiet enjoyment of his property and that the property ought to have a lower assessment as a result.

18The Appellant submitted a portion of a valuation study conducted by Valco Consultants Inc. in 2006 (‘Valco’). He cited the Valco study as having been completed to arrive at an opinion of the effects of the Northstar contamination on some 300 single family dwellings in the area of the subject property.

19The Valco study described the affected properties as falling into three categories of impact due to the Northstar contamination, and makes separate findings on the impact to value for the three categories. The subject property is described by Valco as a Level 3 property. The Appellant relied on the following excerpt from the Valco study:

“Given the shortage of market sales data to analyze properties with the SVE sheds or properties connected to these systems, it was difficult to arrive at concrete conclusions from the market. Therefore the impact was based on Court decisions, Municipal Property Assessment Corporation decisions, other contamination situations, easement compensation decisions and a Scoring Model. Based on this portion of the study, the impact on value could range from 15% to 30%. It is suggested that each property be valued on an individual basis.”

20Mr. Hipel explained that his approach to current value was simple. Relying on the 2006 Valco study, which identifies the subject property as a ‘Level 3’ property, he applied the lowest level of the range of reduction in current value Valco expected for the presence of the venting and SVE systems on properties like his. The Level 3 reduction, according to Valco, was 15% to 30%, recognizing that at the time of the report and its opinions, there had been no sales of Level 3 properties.

21The Appellant further testified that the 2006 Valco study had not been amended, nor had its findings been refuted since it was released. He submitted that the 2006 Valco study included in one of its assumptions that the remediation period would be 10 years in duration. In fact, the remediation, according to Mr. Hipel, is expected to continue for an estimated 50 years and, if anything, this should lead to a larger reduction because of the longer time period affecting the property and the ensuing impact on property value.

22Lastly, the Appellant submitted that there are no sales of properties with SVEs present so, the most reasonable approach to the value of the subject property is the value of $305,000 determined by MPAC and agreed to by the City, with a 15% reduction applied in accordance with Valco 2006, for a final value of $259,000 (rounded).

Board’s Analysis

23The dispute on current value was one of limited scope. There was an agreement that a reasonable current value, absent of any contamination mitigation measures would be $305,000. From this value, MPAC and the City apply a 10% reduction for the presence of these conditions and the Appellant believes the reduction ought to be 15%.

24It is evident that the quantum of the difference in values sought by the parties is not significant, but the reasons for the Board’s decision is important because it may have an impact on how properties in this area of the City are valued in the future, particularly properties that have an operating SVE present.

25The Board heard from the Appellant regarding the condition of the subject property, the encumbrance applied by the presence of the SVE shed and the impacts on their quiet enjoyment of the property. They further submitted that the best indication of the reduction, in the absence of sales evidence of properties, with an SVE and in-ground venting, is the Valco report. The opinion of the Valco author was that the impact would be in the 15% to 30% range. Mr. Hipel submits the low end of the range is reasonable to him and his family and that it ought to be reasonable to MPAC and the City as well.

26MPAC presented two decisions. In Bergez v. Municipal Property Assessment Corp., Region No. 19, [2007] O.A.R.B.D. No.101, the Board Member found that the Appellant did not present evidence to quantify the impact contamination had on the current value or to show that the reduction recommended by MPAC is inadequate. In Bliss v. Municipal Property Assessment Corp., Region No. 17, [2014] O.A.R.B.D. No. 514 the Board Member found that the Appellant failed to produce evidence quantifying the monetary costs and stigma associated with contamination and its affect on the current value or that an adjustment for equity was required.

27The Board finds that neither of these cases speak to the issue at hand. The parties agree that a reduction in current value is necessary owing to the proximity of the subject property to the Northstar contamination area. The parties also recognize the existence of the 2006 Valco report. The Valco report constitutes evidence to quantify the impact on current value of the contamination. The Board must consider how the findings of that report apply to the subject property.

28Both the City and MPAC argued that the 2006 Valco report can only be applied to the 2008 valuation day and cannot be used for the 2016 valuation day because of the significant passage of time. The Board disagrees. The Valco report was specific in the wording of its conclusions. Its opinion was that, owing to the presence of an SVE and in-ground venting, properties like this one would most likely have a value that is 15% to 30% less than the same property without these conditions. It was not disputed that the conditions in the Valco report (which led to the conclusion of a 15% to 30% reduction) continue to exist and are expected to last for up to 50 years in total. This alone makes the report relevant to our analysis and determination of current value. Further, there is no reference by Valco to any specific valuation day for the use of this range.

29The Act stipulates that the assessment of land shall be based on its current value. Current value is defined in the Act 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, meaning that, in order to accept evidence of data in determining current value, it is best to use evidence that is based on sales.

30It is widely held by the Board that the best evidence of current value is a sale of the subject property on the valuation day. Where no such sale occurs, sales of comparable properties with proximity to the valuation day is the next best evidence. In this case there are no comparable sales as none of the properties in the area have sold with proximity to the valuation day that also have an SVE and in-ground ventilation. In this case, sales are simply not comparable enough unless they share these conditions.

31Exhibit 4 included portions of the 2006 Valco study, authored by Mr. Dan Tapping. The report categorized properties in the area into three groups, described as Level 1, Level 2 and Level 3. The subject property is a Level 3 property that has an SVE shed on the land. The conclusion of the 2006 report is that such properties would likely experience a 15 to 30 percent reduction in value, but that an insufficient number of sales were available for a specific reduction and that properties with SVEs should be valued individually.

32The Board finds the Valco Report is the best evidence of the impact of the SVE presence on current value, in the absence of meaningful sales data for properties with the same mitigation features as the subject property.

33The Board also finds that the interpretation of the findings of the Valco report by the Appellants is most reasonable. Without any evidence to refute the “15% to 30%” range, the Hipel’s suggest that at least the lower end of that range should apply to the subject property. The Board agrees and finds that the current value of the subject property is $305,000 (being the value, based on sales without the SVE and venting conditions) reduced by 15%, the lowest level suggested by Valco 2006, for a current value of $259,250 or $259,000, rounded.

Is a reduction in the current value necessary to achieve equitable assessment when reference is made to the assessments of similar properties in the vicinity?

34The Appellant did not make a submission on the question of equity of assessment.

35Both the City of Cambridge and MPAC submitted equity analyses that compared the time adjusted sale value of single family dwellings in the vicinity of the subject property.

36The City’s study considered twenty six such sales and arrived at a median Assessment to Time Adjusted sale ratio of 0.95, indicating, according to Mr. Hotson, that generally speaking, similar properties in the vicinity of the subject property are being assessed at approximately 95% of their sale value and that, as a result, no adjustment for the purpose of equitable assessment is required in this case.

37Ms. Hotson submitted MPAC’s equity analysis that included the Time Adjusted Sales (“TAS”) values and the 2016 CVA of 24 similar properties in the vicinity of the subject property. She testified that the comparison of these assessments to sale values is called the Assessment to Sale Ratio (“ASR”). The range of ASRs in the sample was from 0.766 to 1.271, with a median of 0.997. She explained that this is a statistical exercise to make a determination of equity of assessment and that two parameters are used to confirm that the findings are not erroneous. The first is the co-efficient of dispersion (“CoD”), which is the average difference between any one ASR and the resultant, median ASR in the study. The lower the CoD, the more accurate the findings of the study are considered. In this case the CoD is 9.3 which is considered to conform to the International Association of Assessing Officers’ (“IAAO”) suggested maximum of 15.

38The second parameter used to test the reliability of the equity analysis according to Ms. Hotson, is the proximity of the median ASR to 1.00. The subject study indicates that the median ASR of the 24 properties in the study is 0.997, meaning that generally speaking, properties that are similar to the subject property, in the same vicinity are assessed at approximately 99.7% of their current value as determined through sales. Ms. Hotson testified that a median ASR that is anywhere between 0.95 and 1.05 (as indicated by the IAAO and MPAC) suggests that properties are generally assessed at their current value, and that there is no requirement to reduce the current value determined to make the assessment equitable.

39The Appellant did not refute the findings of either the City or MPAC on the question of equitable assessment.

Board’s Analysis

40The concept of reducing the current value determined to make the subject property’s assessment equitable with that of similar properties in the vicinity requires the Board to change a correct assessment finding to one that is incorrect to make it fair and equitable. Adjustments for this purpose cannot therefore be made without compelling evidence to do so.

41The Appellant, who has the onus of burden of proof on the equitable assessment issue, did not submit any evidence on this point.

42MPAC’s equity analysis indicates that, in accordance with standards set by the IAAO and MPAC, similar properties in the vicinity to the subject property are being assessed at a level close to their sale values and that no downward adjustment to the current value determined is necessary for the purposes of equitable or fair assessment. The City’s equity analysis made a similar finding. The Board finds that the equity analysis prepared by MPAC is the best evidence of whether or not the current value determined requires a reduction to be equitable and fair, and that no adjustment is required in this case.

CONCLUSION

43The Board finds the current value of the subject property is $259,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

44Accordingly, the assessment of 562 Grand Valley Driver for the 2017 taxation year is reduced from $274,000 to $259,000, in the Residential property class. This same result applies to the deemed 2018 taxation year.

2018 DEEMED APPEAL

45An 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.

46Section 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.