Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 21, 2018

FILE NO.: WR 154644

Assessed Person(s): Martin Simon and Evelyn Simon

Appellant(s): Martin Simon

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 17

Respondent(s): Muskoka Lakes Township

Property Location(s): 1026 Berners Road

Municipality(ies): Muskoka Lakes Township

Roll Number(s): 4453-040-003-01300-0000

Appeal Number(s): 3262135 and 3309064

Taxation Year(s): 2017 and 2018

Hearing Event No.: 701288

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

Heard: July 23, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Martin Simon	Self-represented
MPAC	Pam Mulligan
Muskoka Lakes Township	No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

1This is an appeal of the assessed value of 1026 Berners Road. The Appellant, Martin Simon, argues that the assessment, as of the January 1, 2016 valuation day, should be $570,000.

2MPAC’s representative, Pam Mulligan, argues that the assessment as returned of $670,000 for the 2017 and 2018 taxation years is correct and equitable.

3For the reasons stated below and pursuant to s. 44(3)(a) of the Act, I find that the current value of the subject property, as of the January 1, 2016 valuation day, is $670,000. The evidence demonstrates that, pursuant to s. 44.(3)(b), a reduction is not required to make the assessment equitable with that of similar properties in the vicinity. I therefore confirm the assessment for the 2017 and 2018 taxation years at $670,000 in the residential property class.

LEGISLATION

4Section 44.(3)(a) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act"), requires the Assessment Review Board (“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, set pursuant to s. 19.3 of the Act, which, in this case is January 1, 2016 for the 2017 and 2018 taxation years.

5Once 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 assessment.

CURRENT VALUE

Description of the Subject Property

6The subject property is located on Bass Lake in Muskoka Lake Township. The lot’s effective waterfront is 188 feet, the effective lot size is 0.26 acre and its topography is described as slightly sloped. There is a single storey cottage built in 2006 with a basement walk-out. Both the main floor and the basement have 1,111 sq. ft. of building area and the basement has 888 sq. ft. of finished area. The cottage has two-and-one-half bathrooms, a fireplace and a western exposure. The property is located on a seasonal road.

Evidence of Current Value

7The best evidence of current value of a residential property is an open market sale of that property on or near the valuation day. When that evidence is not available, open market sales of similar properties on or near the valuation day are usually the next best evidence.

8Ms. Mulligan used bracketing to support the assessment as returned, presenting four sales and arguing that the assessment as returned is correct because it falls within the range of her sales’ prices. Like the subject property, all of the sales are located on Bass Lake and have walk-out basements which are partially finished. Unlike the subject property, all of the sales have year-round road access and either an east or north facing exposure. Ms. Mulligan argues that the size of the waterfront and a western exposure are driving forces of property values in the area.

9MPAC’s Sale 1, 1153 Kendon Road, has a larger lot size (0.61 acre) and a slightly larger building size (1,352 sq. ft.). It is located on a year-round access road and it has an attached garage. It is similar in that it also has a slightly sloping topography. Ms. Mulligan argues it is inferior because it faces north, is older (1994) and has a smaller waterfront (117 effective feet). Mr. Simon argues that the year-round access road and the northern exposure likely balance each other out. Based on the age and the waterfront, I find that it is slightly inferior to the subject property. It sold in July 2016 for $637,500. I find that the subject property would likely sell for more than this sale price.

10MPAC’s Sale 2, 1097 Kendon Road, is superior to the subject property in total lot area (0.47 acre), age (2012) and because it is located on a year-round access road. It has a similar building size (1,087 sq. ft.), a slightly smaller waterfront (125 feet) and an eastern exposure. It sold in May 2013 for $887,000. Based on its age and lot size I find it is superior to the subject property and that the subject property would likely sell for less.

11MPAC’s Sale 3, 1031 Hallett Road, is similar to the subject in building age (2009) and building size (1,094 sq. ft.). It is superior in that it is located on a year-round access road and the total lot size is larger (0.43 acre). It has an eastern exposure which Ms. Mulligan classifies as inferior to the subject property’s western exposure. On balance, I find it is inferior to the subject property because it has a smaller waterfront (105 feet) and an inferior topography which is described as having a steep slope with a poor or obstructed view. It sold for $640,000 in May 2015. I find that the subject property would likely sell for more.

12MPAC’s Sale 4, 1075 Hallett Road, was built in 1970 and underwent a renovation resulting in MPAC allocating an effective year built of 1993. It is inferior to the subject property in age, waterfront (140 feet), topography which is described as a steep slope and an eastern exposure. It is similar in building size (1,092 sq. ft.) and lot size (0.36 acre). It sold in September 2014 for $650,000. Based on its age and topography, I find it is inferior to the subject property and that the subject property would sell for more.

13Mr. Simon argues that non-western exposures are not significant to the value, especially where the properties are located on maintained, year-round access roads. He argues that the two will cancel each other out. I have considered this argument in my analysis of the sale properties.

14Mr. Simon argued that MPAC’s model uses a square root function to calculate the value of waterfront. The typical lot on Bass Lake has 100 linear feet of waterfront. Because his lot has a larger waterfront, the value per linear foot is reduced to reflect the economy of scale. His calculations show that the value given to his lot’s frontage is equal to a frontage measuring 137 linear feet. This is an important argument with respect to MPAC’s model. However, in determining the current value, I am not concerned with how MPAC’s model works but with what the subject property might sell for on the valuation day. A prospective purchaser does not typically consider economies of scale but is likely to prefer a larger waterfront.

15Mr. Simon objected to MPAC putting insufficient weight on the depth of a property (rather than the size of the waterfront) in their assessments. He argues that his lot is somewhat lacking in depth and that depth and wooded lots provide privacy. Mr. Simon also argued that MPAC had given his property a -10% adjustment for the January 1, 2012 valuation day but not for the January 1, 2016 valuation day. Ms. Mullins said that adjustment factor was removed because the MPAC’s model caught and included this variance in 2016. She explained that the shallowness of the water in front of the subject property and the lot’s depth are mitigated in the model and, therefore, the -10% adjustment is no longer required.

16Mr. Simons presented four sales. Sale 1, 21-1141 Bass Lake, has an overall lot size that is 39 times larger than the subject property at 10.21 acres with 527 feet of waterfront and an effective depth of 844 feet. Unlike the subject property, it has a two storey cottage with 1,850 sq. ft. of building area. The basement is smaller and partially finished. It sold in December 2013 for $610,000. Mr. Simon argues that this sale price, which is two years prior to the valuation day, is less than his property’s 2016 assessed value. Mr. Simon argued that his property should be assessed less than this property’s sale price. Ms. Mulligan argued that the 2013 sale value and the 2016 assessed value of $614,000 reflects the fact that a substantial portion of the lot is swampy and that there is a deeded right-of-way for other cottages. Based on the evidence provided by the parties, I do not find this property is comparable to the subject property.

17Mr. Simon’s Sale 2, 11-1000 Kendon Road, has a similar lot size (0.38 acre) with a smaller waterfront (100 feet) but more depth (166 feet). It has a similarly sized cottage (1,076 sq. ft.) but has a much smaller basement (260 sq. ft.) which is mostly finished and it is older than the subject property (1979). It sold in June 2015 for $400,000. Using MPAC’s data, Mr. Simon suggested that, adjusting for only depreciation between this property and his, the subject property would be over-assessed by $261,000. He did not provide any other adjustments. I cannot rely on a single adjustment when there are more differences between these two properties. However, I find that this property is inferior to the subject property in terms of age, waterfront and basement area and, therefore, the subject property would sell for more than $400,000.

18Mr. Simon’s Sales 3 and 4, 1109 Kendon Road and 15-1000 Kendon Road, sold in June 2012 and August 2012, respectively. I am not considering these sales because they occurred too far from the January 1, 2016 valuation day.

19Of the five sales I have considered, I find that the subject property would sell for more than $650,000 but less than $887,000. The subject property is assessed at $670,000 which is at the low end of the range of sale prices. Based on the sales evidence, I find that the subject property’s assessed value of $670,000 is its current value.

EQUITY

20Ms. Mulligan submitted an equity analysis report which looked at the level of assessment of 30 residential properties that sold between January 2013 and December 2016 on local small lakes in the vicinity of the subject property. Ms. Mulligan submits that the market for small lake sales is somewhat different from the larger, more prestigious lakes in the area. The median assessment to sale ratio for these 30 sales is 0.978 with a co-efficiency of dispersion of 5.2 which, she argues, indicates that no adjustment is necessary for the purpose of equity. I appreciate that Ms. Mulligan chose sales from smaller lakes, however, I am concerned with the range of sale dates as the earlier sales are some distance from the valuation day. In reviewing the equity analysis, I looked at just the sales which occurred within 12 months of the valuation day. The median assessment to sale ratio of those sales is 1.00. This supports Ms. Mulligan’s position that no adjustment for equity is required.

21Mr. Simon argued that the subject property should be assessed at $570,000 based on the adjusted assessment of 1020 Berners Road. This property has a smaller waterfront (100 feet) and a larger depth (166 feet) for a total lot size of 0.38 acres. It is similar to the subject property in that it has a single storey cottage with 1,285 sq. ft., on the main floor and the same in the basement, 642 sq. ft. of which are finished and it was built in 2002. It is assessed at $559,000. Mr. Simon adjusted the assessment using MPAC’s depreciation factors for both his property and this property which resulted in a value of $570,000.

22Mr. Simon also made similar adjustments to five other property assessments. There is some merit to this argument but the data and calculations are incomplete. If Mr. Simon makes adjustments for depreciation, then adjustments for other differences, such as size of lots, waterfronts and buildings, the number and types of out-buildings, quality of construction and number of bathrooms should also be made.

23I prefer Ms. Mulligan’s equity evidence as it is a measure of how well MPAC’s model is working in the vicinity and contains a large sample of sales.

24Accordingly, I find that the current value requires no adjustment for the purpose of equity.

CONCLUSION

25I find that the current value for the 2017 and the deemed 2018 taxation years is $670,000 and that an adjustment is not warranted for the purpose of equity. I therefore confirm the assessment of $670,000 for the 2017 and 2018 taxation years.