Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: August 23, 2018 FILE NO.: WR 154392

Assessed Person(s): Clint David Beairsto Appellant(s): Clint David Beairsto Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 29 Respondent(s): City of Timiskaming Shores

Property Location(s): 11608 Quarry Road Municipality(ies): City of Timiskaming Shores Roll Number(s): 5418-030-012-11407-0000 Appeal Number(s): 3256706 and 3314376 Taxation Year(s): 2017 and 2018 Hearing Event No.: 700670

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

Heard: July 18, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Clint David Beairsto	Self-represented
MPAC	Mario Pittui
City of Timiskaming Shores	Chris Oslund

DECISION OF THE BOARD DELIVERED BY MARCELLE BOURASSA

INTRODUCTION

1Clint Beairsto, (the "Appellant") is the owner of a two storey single family detached home located at 11608 Quarry Road (the "subject property") in the City of Timiskaming Shores ("City"). It has 2,920 square feet (sq. ft.) of building area and was built in 2010. MPAC has assigned it a quality of construction rating of 7.0. It has a private well and a septic bed. It is located on a 2.23 acre lot.

2MPAC returned the assessment for the subject property at $441,000 for the 2017 taxation year and at $415,000 for the 2018 taxation year.

3Mr. Beairsto appealed the assessment for the 2017 and 2018 taxation years to the Assessment Review Board (the "Board"), pursuant to s. 40 of the Assessment Act R.S.O. 1990, c. A.31 ("Act"). He takes the position that the subject property is assessed too high. He is of the opinion that the subject property's current value should be between $337,000 and $365,000.

4Pursuant to the Assessment Act, R.S.O. 1990, c. A.31 ("Act") the burden of proof as to the correctness of the current value of the subject property rests with MPAC. For the period of 2017 to 2020, the subject property is valued as of January 1, 2016. MPAC's representative, Mario Pittui, estimates the current value of the subject property to be $441,000 based on the direct comparison approach.

5Mr. Pittui conducted an equity study. He recommends that the subject property's current value be reduced to $389,000. It is MPAC's positon that the assessment for the subject property should be reduced from $441,000 to $389,000 for the 2017 taxation year and from $415,000 to $389,000 for the 2018 taxation year.

6Mr. Beairsto did not take a position on whether an equitable reduction to his opinion of current value is required. Rather, he asserts that for homes that sold above $300,000, MPAC is over estimating the value of that market by approximately 20% despite an overall market decrease of negative 4.18%. He takes the position that the subject property's assessment should be between $337,000 and $365,000.

ISSUES

7The issues to be determined are:

a) What is the correct current value of the subject property as of the January 1, 2016 valuation date?

b) Whether there should be an equitable reduction of the current value as determined by the Board and, if so, what should the amount of this reduction be?

DECISION

8The Board finds that the current value of the subject property, as of the January 1, 2016 valuation date, is $365,000 under s. 44.(3)(a) of the Act. Furthermore, the Board finds that the evidence does not support the conclusion that the current value requires an equity adjustment under s. 44.(3)(b) of the Act.

9Therefore, the assessment of the subject property located at 11608 Quarry Road is reduced from $441,000 to $365,000 for the 2017 taxation year and from $415,000 to $365,000 for the 2018 taxation year.

RELEVANT LEGISLATION

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(1) of the Act states:

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

12Section 19.2(1) of the Act states:

Valuation days

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

1. For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005.

2. For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.

3. For the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

13Section 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.

14Section 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.

Analysis and Findings

a) What is the correct current value of the subject property as of the January 1, 2016 valuation date?

MPAC's Evidence and Submissions

15Mr. Pittui states that the subject property is located in an area of newer homes with lot sizes that are greater than one acre.

16He relies on a Valuation Report. Key property details for the six comparable properties are set out below. Sales have been time adjusted. A Sales Ratio Trend Analysis ("SRTA") study was conducted based on 139 sales of vacant land and/or improved land from the subject property's neighbourhood and adjacent areas from January 1, 2012 to December 22, 2017. The overall change in the market is negative 4.18 %. The SRTA study determined time adjustment factors that were used to adjust the sales to the valuation date.

Property	Site Area (Acres)	Year Built (effective)	Quality	Blg Area (sq. ft.)	Other	Sale (Time Adjusted Sale "TAS") ($)
11608 Quarry Road (subject property)	2.23	2010	7.0	2,920	Attached garage
1 88 Ferland Street	1.12	1986	7.0	2,259	Attached garage Finished basement area (500 sq. ft.)	336,000 (326,680) (05/02/2012)
2 116043 Quarry Road	1.54	2000	6.0	1,344	Raised bungalow Finished basement area (967 sq. ft.) Detached Garage	365,000 (357,593) (05/24/2013)
3 540 Georgina Avenue	0.23	1923 (1968)	6.0	1,971	C reno (1998) A reno (exterior)(2004) Detached Garage	292,000 (291,430) (10/30/2015)
4 692 Latchford Street	0.46	1923 (1973)	7.0	2,263	D reno(1986) A reno (exterior) (1999) Detached Garage	295,000 (298,145) (05/17/2017)
5 380 Probyn Street	0.34	1924 (1960)	7.0	2,810	C reno( 1986) New area (1989) Finished basement area Attached garage Shed Pool	315,000 (315,864) (05/12/2016)
6 440 Georgina Avenue	0.15	1923 (1957)	7.0	1,708	C reno (1992) Finished basement area Detached garage Shed	189,000 (187,898 (04/10/2015)

17Mr. Pittui states that he considers Sale 1 as similar to the subject property and Sales 2 to 6 as inferior to the subject property.

18Mr. Pittui commented that Mr. Beairsto's suggested comparable at 704079 Rockley Road was sold by the bank and was not a valid arm's length sale.

19Mr. Pittui also commented that Mr. Beairsto's Haileybury market study of two storey home sales includes duplexes, townhouses and estate sales.

20Mr. Pittui states that he estimates the current value of the subject property as $441,000 based on the direct comparison approach taking into account differences in building area, year of build, finish etc. The value was generated by the computer model. The reference to the value of $389,000 in the Valuation Report was a typo.

Appellant's Evidence and Submissions

21Mr. Beairsto states that the subject property was purchased in August 2010 for $341,000. The 2012 assessment was determined as $352,000 through the Request for Reconsideration process. He states that the 2016 assessment of $441,000 represents an increase of $89,000 notwithstanding that the market in his area has decreased by negative 4.18% from January 2012 to December 2017. He asserts that based on this value, the assessed value should have been $337,286.

22Mr. Beairsto's professional background is in the IT industry and he is a Microsoft Certified Systems Engineer. He asserts that based on his research, MPAC's computer based model consistently over values properties in the City of Timiskaming Shores area. For homes that sold above $300,000, MPAC is over estimating the value of that market by approximately 20% despite an overall market decrease of negative 4.18%.

23Mr. Beairsto asserts that sales of high end market properties are rare and sell for dramatically less than MPAC's assessed values.

24The Board inquired whether Mr. Beairsto was aware of any recent sales in his area on Quarry Road. He states that there are lots of one storey properties in his area. He referred to the sale of 116099 Quarry Road located across from the subject property and which he described as superior. At the request of the Board, Mr. Pittui provided key property details. It is located on a five acre lot and has a one storey dwelling with a total building area of 3,094 sq. ft. and an attached garage built in 2006. There is a finished basement area of 954 sq. ft. It also has a detached garage built in 2008. MPAC has assigned it a quality of construction rating of 8. It sold for $460,000 in November 2013 and is assessed at $511,000, apportioned at $489,000 in the residential property class and at $22,100 in the commercial property class.

25Mr. Beairsto states that it is difficult to find comparable properties in the higher end market with sales greater than $300,000 as there is not a lot of movement.

26He referred to the sales of two properties that he asserts are most directly comparable to the subject property. They are two storey homes with similar total building areas to the subject property. They are located in Dymond, a similar farm type area with no municipal services. Dymond is also part of the City of Timiskaming Shores. He opines based on their 2016 assessments of $377,000 and $332,000, respectively, that both are deemed very high end properties, like the subject property. However, both sold for much less than their respective 2016 assessments.

Property	Site Area (Acres)	Year Built (effective)	Quality	Blg Area (sq. ft.)	Other	Sale	2016 CVA
11608 Quarry Road (subject property)	2.23	2010	7.0	2,920	2 storeys
704079 Rockley Road	2	1965	6.0	2,676	2 stories Finished basement area (485 sq. ft.)	92,000 (2015)	377,000
998167 Highway 11	1.86	1976	6.5	1,850	2 stories Finished basement area (814 sq. ft.)	260,000 (2015)	332,000

27Mr. Beairsto also referred to four direct neighbourhood sales located on West Road, a few kilometres away from the subject property, in Haileybury (also part of the City of Timiskaming Shores). He observed that Sale 2 located at 2583321 West Road, has a 2016 assessment of $365,000 and is higher than its sale price of $290,000.

Property	Site Area (Acres)	Year Built (effective)	Quality	Blg Area (sq. ft.)	Other	Sale	2016 CVA
11608 Quarry Road (subject property)	2.23	2010	7.0	2,920	2 storeys
2583321 West Road	19.99	(1984)	7.0	1,934	1 story Finished basement area (192 sq. ft.) C reno (1973) A reno (1998)	290,000 (2015)	365,000

28Mr. Beairsto also referred to a study of the sales of 18 two storey homes in the Haileybury market. Unlike the subject property, they all are within Haileybury and have sewers and water, etc. The average sale price was $155,172.22. Only two houses had sales over $250,000 and none sold above $300,000.

29He states that Mr. Goudreault, a local real estate professional, inspected the subject property, researched direct market comparables and advised that the high end value that he would put on the subject property is $365,000. Mr. Beairsto included several MLS listings provided to him by Mr. Goudreault in his disclosure. He states that the property at 578 Maille, located outside of New Liskeard (also part of the City of Timiskaming Shores), is closest to the subject property in terms of size and location. It sold in April 2013 for $330,000. It is a two storey single detached home with 2,148 sq. ft., 500 sq. ft. of finished basement area and a detached garage. It was built in 1990 and has a quality construction rating of 7.0. It is located on a 0.90 acres lot. Like the subject property, it has a well and a septic bed.

30Mr. Beairsto considers MPAC's suggested comparable located at 88 Ferland Street to be located closer to Haileybury. It has municipal water (but no sewers) whereas the subject property has a private well.

31Mr. Beairsto is of the opinion that the subject property's current value should be between $337,000 and $365,000.

Analysis and Findings

32Under s. 44.(3)(a) of the Act, the Board must first determine "the current value of the land." The best evidence the Board can receive of current value is an arm's length and market-tested sale of the subject property on the valuation date or close to it. If, as in this case, no such transaction took place, the next best measure of current value is arm's length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.

33To enable an estimate of value for the subject property to be derived from suggested comparable properties, there must be sufficient elements of similarity, in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc. so as to enable a direct comparison to be made.

34The Board finds the properties located at 88 Ferland Street, 540 Georgina Avenue, 692 Latchford Street, 998167 Highway 11, 2583321 West Road and 578 Maille to be inferior to the subject property in terms of either site area, age of build, building area or quality of construction.

35The Board finds the sales of 116043 Quarry Road and 116099 Quarry Road to be the best evidence in the determination of the subject property's current value. They are located in the immediate area of the subject property among newer homes with lot sizes that are greater than one acre and also lack municipal services. In fact, 116099 Quarry Road is located across from the subject property.

36The Board finds 116099 Quarry Road to be a superior property to the subject property given that it is located on a much larger five acre lot. It has a larger building area of 3,094 sq. ft. in addition to another 954 sq. ft. of finished basement area that contributes to the overall living space. There is a detached garage in addition to the attached garage. Unlike the subject property, it is a one storey dwelling. Mr. Beairsto indicated that one storey dwellings are common in this area. It is similar in age having been built in 2006. However, MPAC has assigned it a higher quality of construction rating of 8.0. It sold for $460,000 in November 2013 and is assessed higher at $511,000, apportioned at $489,000 in the residential property class and at $22,100 in the commercial property class.

37The Board finds 116043 Quarry Road to be an inferior property to the subject property. It is located on a smaller 1.54 acre lot. It has a smaller building area of 1,344 sq. ft. but an additional 967 sq. ft. of finished basement area that contributes to the overall living space. There is a detached garage. Unlike the subject property, it is a one storey dwelling, in this case a raised bungalow. It is similar but older in age having been built in 2000. MPAC has assigned it a lower quality of construction rating of 6.0. It sold for $365,000 in May 2013 but its 2016 CVA is lower at $299,000.

38The Board has referred to the actual sale values as no time adjustment factor was available to adjust the sale price for 116099 Quarry Road to the valuation date. Based on the sales evidence, the Board finds that the subject property's current value lies in the range of $365,000 to $460,000. The Board also finds that the opinion of value of $365,000 provided to Mr. Beairsto by a local real estate professional falls within the sales range albeit at the low end of the end of the range.

39The Board has also taken into account MPAC's evidence of an overall change in the market of negative 4.18 % during the period of January 1, 2012 to December 22, 2017 and that MPAC has conceded that properties in the subject property's vicinity are over assessed by an average of 13%. The property at 116043 Quarry Road, the Board finds to be inferior to the subject property sold for $365,000 but its 2016 assessment is approximately 18% lower at $299,000.

40In the circumstances of this case, the Board sets the subject property's current value at the low end of the range at $365,000.

Whether there should be an equitable reduction of the current value pursuant to s. 44.(3)(b) of the Act, and, if so, what should the amount of this reduction be?

MPAC's Evidence and Submissions

41Mr. Pettui relies on an Equity Analysis Report that considered the sales of 30 residential properties that occurred between January 1, 2012 and January 1, 2018, located within five kilometres of the subject property.

42In the report, he states that the level of appraisal is established by determining the median Assessment to Sale Ratio ("ASR") in the sales sample. In this instance, the sales sample produced a median ASR of 1.132. For purposes of the equity test, MPAC takes the position that equity is achieved if the median ASR falls between 0.95 and 1.05. The median ASR of 1.132 indicates that similar properties in the vicinity have not been assessed at or near their current values. Mr. Pittui states that properties are over assessed by an average of 13%.

43Mr. Pittui states that he will honor a recommended value of $389,000 (rounded) that reflects an approximate reduction of 13%.

Appellant's Evidence and Submissions

44Mr. Beairsto did not take a position on whether an equitable reduction to his opinion of current value is required. Rather, he asserts that for homes that sold above $300,000, MPAC is over estimating the value of that market by approximately 20% despite an overall market decrease of negative 4.18%. He takes the position that the subject property's assessment should be between $337,000 and $365,000.

Board's Analysis and Findings

45Section 44.(3)(b) of the Act directs that after determining the current value, the Board shall 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."

46The purpose of equitable adjustment has been described as the equitable distribution of the tax burden according to the assessed value of property owned by taxpayers as follows by the Ontario Court of Appeal in Re Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) at page 2:

A prime objective of municipal taxation is the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the application of a uniform mill rate upon the assessed value of the ratepayer's taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

47In addressing equity in assessment, the Court, at page 6, also noted that "... an assessment made at the actual value of lands and buildings ... would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred ... [emphasis added]."

48The term "vicinity" is not defined in the Act, but refers to the appropriate geographical area that will yield a meaningful number of comparables (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (ON CA) at page 6).

49The test set out in s. 44.(3)(b) of the Act, requires that the Board refer to similar lands in the vicinity. Use as a point of similarity, may be, but is not necessarily determinative of similarity. In determining whether other lands are similar, the Ontario Divisional Court, in Municipal Property Assessment Corp. v. Loblaw Properties Ltd., 2017 ONSC 1299, [2017] O.J. No. 1010 ONSC 1299, 276 A.C.W.S. (3d) 220, 62 M.P.L.R. (5th) 253, 2017 CarswellOnt 2861, applied the decision of the Ontario Divisional Court in Trizec Equities Ltd. v. Ontario Regional Assessment Commissioner, Region No. 27, [1988] CarswellOnt 549, [1988] O.J. No. 182, 27 O.A.C. 203, 37 M.P.L.R. 175, 8 A.C.W.S. (3d) 399. The Court stated at paragraph 9:

... All points of comparison must be considered. The Board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.

50The ASR analysis of a reasonable sample of sold properties is one method used to determine if properties in the vicinity are assessed below their current value. If other properties are assessed substantially below their current value then a reduction is required to make the assessment of the subject property equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the sale price.

51Mr. Pittui relies on an Equity Analysis Report that considered the sales of 30 residential properties that occurred between January 1, 2012 and January 1, 2018, located within five kilometres of the subject property that produced a median ASR of 1.132. The median ASR of 1.132 indicates that the level of current value assessments of similar properties is not in line with the level of sales prices in the vicinity. However, the ASR of 1.132 cannot form the basis of a s. 44(3)(b) adjustment. An adjustment for equity can only be made when there is clear evidence that similar properties in the vicinity are assessed below their current values.

52Mr. Beairsto did not take a position on whether an equitable reduction to his opinion of current value is required.

53Therefore, the Board finds that the evidence before it does not support an equitable reduction of the current value as determined above of $365,000 pursuant to s. 44.(3)(b) of the Act.

CONCLUSION

54The Board finds that the current value of the subject property, as of the January 1, 2016 valuation date, is $365,000 under s. 44.(3)(a) of the Act. Furthermore, the Board finds that the evidence does not support the conclusion that the current value requires an equity adjustment under s. 44.(3)(b) of the Act.

55Therefore, the assessment of the subject property located at 11608 Quarry Road is reduced from $441,000 to $365,000 for the 2017 taxation year and from $415,000 to $365,000 for the 2018 taxation year.