Helena Axler & Associates Inc v. Municipal Property Assessment Corporation, 2018 CanLII 80814

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 20, 2018 FILE NO.: WR 154092

Assessed Person(s): Helena Axler & Associates Inc Appellant(s): Helena Axler & Associates Inc Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 17 Respondent(s): Township of Lake of Bays Property Location(s): 194 Bigwin Island Municipality(ies): Township of Lake of Bays Roll Number(s): 4427-010-022-11195-0000 Appeal Number(s): 3262125 and 3309086 (deemed 2018) Taxation Year(s): 2017 and 2018 (deemed appeal) Hearing Event No. 700571

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

Heard: June 6, 2018 by telephone conference call

APPEARANCES:

Parties	Counsel+/Representative
Helena Axler & Associates Inc	Jeffrey Axler
MPAC	Sue Hummel
Township of Lake of Bays	No one appeared

DECISION OF THE BOARD DELIVERED BY TYRONE D. SKANES

ISSUE

1Bigwin Island is located in the Township of Lake of Bays. Lake of Bays is one of the largest lakes in Muskoka and Bigwin is the largest island amongst many in the bay. The island once hosted the Bigwin Inn resort but it closed and portions of the island have been rejuvenated, with a mix of modest, seasonal cottages and large, custom built homes. There is an 18 hole golf course on the island.

2The appeal before the Assessment Review Board ("Board") is filed by Helena Axler & Associates Inc (the “Appellant”) in respect of the assessment of a single- family detached seasonal/recreational home on water, for the 2017 and deemed 2018 taxation years. The subject property is located at 194 Bigwin Island (“SP”).

3The two storey dwelling has 3,760 square feet ("sq. ft."), with 2,314 sq. ft. on the first floor and 1,446 sq. ft. on the second. The home was built in 2015. There is no basement. The lot size is 1.31 acres with a water frontage of 205 feet (“ft”). There is hydro service to the dwelling and it is winterized. The quality of construction (“QC”) is 7.5. The home is accessible only by water. There are no secondary buildings on the property. There is a large dock waterside.

4Sue Hummel, representing MPAC, introduced the sales of four comparable properties that she said were good comparators and are in the same neighbourhood as the SP. She said that the current value assessment (“CVA”) of the SP is $1,781,000, which she opines is fair and reasonable. She is asking the Board to confirm the assessment at that value.

5Jeffrey Axler, representing the Appellant, did not enter any sales evidence to support his request for a reduction of the CVA by 10 to 15%. He argued that properties on Bigwin Island were not selling very well and that those that did were selling for less than their assessed values. He pointed out that new homes were being built bordering the golf course and that not one of those had sold. He opined that prospective buyers were not as interested in living on the island as in past years due to many factors. He said that the values attached to these properties were less than comparable properties on the mainland. He asked the Board to reduce the assessment by 10 to 15%.

6The issue before the Board for determination is whether the assessment of the SP for the 2017 and deemed 2018 taxation years is at current value and whether the assessment is equitable with the assessment of similar lands in the vicinity.

DECISION

7The Board is required by s. 44.(3) of the Act to determine the current value of the land and have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment 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.

8The Board finds that the current value of the SP is $2,804,696. However, MPAC has not applied for a higher assessment and the Board therefore confirms the assessment of the SP at $1,781,000 for the 2017 and deemed 2018 taxation years and finds that no adjustment is required for equity.

REASONS FOR DECISION

Relevant Legislation

9Section 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.

MPAC's Position and Evidence

10Ms. Hummel’s valuation report was entered into evidence as Exhibit 1 and an Equity Analysis Report as Exhibit 2. She testified that the direct sales comparison approach to value was used in determining the current value of the SP.

11Ms. Hummel entered the sales of four properties that she opines are good comparators to the SP. All are in the same homogenous neighbourhood as the SP and all are waterfront seasonal/recreational homes. All of the properties have similar sized lots and similar water frontage. With the exception of Sale 2, which was built in 2001, the other three were built within five years of each other. Sales 1 and 2 occurred within the bench years of the valuation date of January 1, 2016. Sale 3 occurred in 2014 and Sale 4 occurred 2013. She said that she included Sales 3 and 4 as there were very limited sales of comparable properties and she wanted to provide the Board with a sufficient number of sales for comparison.

12Ms. Hummel testified that she time adjusted the sales prices (“TAS”) of the comparable properties to the valuation date of January 1, 2016.

13Ms. Hummel said she believed that the CVA of $1,781,000 was fair and reasonable and recommended that the Board confirm the assessment at that value.

14Ms. Hummel entered an equity analysis into evidence. She used the sales of 30 waterfront seasonal properties located within 4.4 kilometres of the SP and determined that the median assessment to sales ratio (“ASR”) was 0.98. She said that this indicated to her that similar lands in the vicinity were being assessed at or near their correct current value and that an adjustment was not required for equity.

Appellant’s Position and Evidence

15Mr. Axler entered a documentary package as Exhibit 3.

16Mr. Axler said that the SP is a unique property, being located on Bigwin Island. It was a requirement of living on the island that you had to be a member of the owners association. He advised that there are restrictions placed on the majority of owners by the association that are a barrier to sales, although he did not identify what those restrictions were.

17Mr. Axler said that few properties on the island had sold. He advised of a condominium development that has been built adjacent to the golf course and not one of those properties had yet sold. He further advised that while some properties had been advertised for sale, they were all eventually taken off the market. He said this indicated to him that there was just no interest in living on the island.

18Mr. Axler said that MPAC’s comparable property 1 at 162 Bigwin Island sold on July 14, 2016 for $1,489,380 despite a listing price of $1,955,000. He said that this sale included all of the furniture and a golf membership. The golf membership is valued at $70,000. He did not have a value for the other chattels that he says were included in the sale.

19Mr. Axler advised that 284 Bigwin Island sold on August 18, 2017 for $1,000,000 despite being assessed at $1,222,000, with a phased in value of $1,148,000 for 2018. He admitted that this cottage was sold as is, as it was still being constructed but pointed out that it still sold for 20% less than its assessed value and 15% less than its phased in value for 2018. He opined that MPAC had over-estimated the market value by 15%.

20Mr. Axler said that the SP did not have a garage or a boathouse and had less water frontage and site area than either of the two properties mentioned above.

21Mr. Axler said that as properties on Bigwin Island are not selling as briskly as elsewhere he believes that MPAC’s assessment of the SP is unrealistically high and when compared to the property at 284 Bigwin Island is valued at least 15% above what the market will bear, although he did not provide any evidence to support this assertion. He was asking the Board to reduce the assessment of the SP by at least 15%.

Board's Deliberations - Current Value

22The best evidence of current value is the sale of the subject property, if the sale meets the definition of current value, on or near the valuation day. When no such sale occurs, as in this instance, the Board looks to the sale of similar lands in the vicinity to determine current value.

23The Board has carefully considered the testimony of the parties and the documentary evidence tendered as exhibits.

24The Board, when comparing properties, does not expect exactness or sameness. Therefore, the Board looks at similarity of characteristics, amenities and location to determine comparability.

25The Board usually considers the sales of comparable properties that have occurred within one year on either side of the valuation date, as the ideal time period for consideration. The Board occasionally does extend the time period for considering comparable properties when the parties have demonstrated that there are an insufficient number of relevant sales.

26MPAC submitted the sales of four properties for consideration. Sales 1 and 2 occurred within the ideal time period. Sale 3 occurred in June 2014 and sale four occurred in May 2013. The assessor testified, and Mr. Axler agreed, that there were a limited number of sales on Bigwin Island. Therefore, she had to expand the time period to find the sales that she included. Although the Board is normally reluctant to venture far outside of the usual ideal time period the Board recognizes that a lack of sales, as agreed to by both parties, required the assessor to include sales 3 and 4.

27The Board accepts this explanation and will consider these sales. MPAC’s comparable properties are reflected below in Table 1.

Table 1

Property	Building Size (Sq. ft.)	Lot Size (Acres)	Year Built	Quality Construction (QC)	Sale Date	Time Adjusted Sale Price (TAS)	Current Value Assessment (CVA)
Subject Property	3,760	1.31	2015	7.5			$1,781,000
Sale 1	2,461	1.53	2015	7.5	July 2016	$1,445,437	$1,303,000
Sale 2	2,586	1.76	2001	8.5	November 2015	$2,011,612	$2,224,000
Sale 3	4,232	2.03	2010	8.0	June 2014	$2,901,013	$2,939,000
Sale 4	3,090	3.67	2010	8.0	May 2013	$2,883,056	$2,146,000

28Mr. Axler did not tender any comparable sales into evidence. He agreed with the assessor that there were few sales on Bigwin Island. He said that this indicated to him that potential buyers of recreational properties were not as interested in living on the island as they once were. He emphasized the point that a new condominium development had been built abutting the golf course and that not one of those units had yet sold.

29Mr. Axler also pointed out that not only were high end properties not selling this was also the case for lower priced properties. However, he did not provide the Board with any evidence to support this assertion. He said that three good cottages had been on the market recently but had not sold and were removed from the market. He did not provide any further information regarding these properties.

30Mr. Axler centered his argument on his assertion that MPAC was over-assessing properties on Bigwin Island by as much as 20%. He claimed this was true because those few properties that did sell were selling for as much as 20% less than the asking price. He highlighted the sale at 284 Bigwin Island as an example. It sold in August 2017 at 20% less than its assessed value, despite not being fully constructed. However, he did not provide any other details about this property so that the Board could conduct an informed analysis in comparison to the SP. Therefore, the Board will not consider this sale.

31As for Mr. Axler’s argument that properties were selling for less than their assessed values, the Board believes that there could be many reasons why this appears so. Perhaps the properties were over-valued by the owners at the time they were put on the market. Perhaps the real estate agents were mistaken in their assessment of what the properties were worth. A property is worth what a person will pay for it at the time of sale, regardless of what the asking price or assessment happens to be.

32The Board is left to consider the four comparable sales entered into evidence by MPAC. The Board recognizes that Bigwin Island is unique in that it has a mix of very valuable properties and those that are valued quite less. Therefore, the Board accepts that it was a daunting task for the parties to find appropriate sales from which an analysis could be conducted. This is the reason the Board accepted the two sales that occurred quite some time from the valuation date.

33The Board is normally reluctant to use a single aspect of comparison when determining comparability between sales properties. However, the Board must deal with the evidence placed before it. Therefore, the Board will utilize the value per square foot of building value method. The Board determined that the average value per square foot of the comparable properties is $745.93. When this value is applied to the square footage of the SP at 3,760, a value of $2,804,696 is returned.

34The Board finds that the current value of the SP is $2,804,696.

Board’s Deliberations – Equity

35MPAC entered an equity study into evidence whereby the sales of 30 similar properties located within 4.4 kilometres of the SP were analyzed. The assessor determined that the median ASR returned at 0.98 and that this fell within MPAC’s ideal range of 0.95 to 1.05 which indicates that similar lands in the vicinity are being assessed at or near their correct current values.

36This Board accepts this equity analysis, and the Appellant did not present any equity evidence to dispute it.

CONCLUSION

37The Board finds the current value of the SP to be $2,804,696. MPAC has not applied for an increase to the assessment, as required by Rule 40(b) of the Board’s Rules of Practice and Procedure. The Board therefore confirms the assessment of the SP at $1,781,000 for the 2017 and deemed 2018 taxation years and finds that no adjustment is required for equity.

2018 DEEMED APPEAL

38An 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.

Section 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.