Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 07, 2018

FILE NO.: WR 153592

Assessed Person(s): Mary Elaine Lavender

Appellant(s): John A. Burbidge-Ryder and M. Elaine Lavender

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 05

Respondent(s): City of Kingston

Property Location(s): 249 Smuggler’s Cove Drive

Municipality(ies): City of Kingston

Roll Number(s): 1011-080-040-09434-0000

Appeal Number(s): 3228403 and 3292479

Taxation Year(s): 2017 and 2018

Hearing Event No. 696573

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

Heard: May 17, 2018 in Kingston, Ontario

APPEARANCES:

Parties	Representative
John A. Burbidge-Ryder and M. Elaine Lavender	John A. Burbidge-Ryder
MPAC	Jack Tyhuis
City of Kingston	Maureen Petersen

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

Background

1John A. Burbidge-Ryder and M. Elaine Lavender (the “Appellants”) are the owners of 249 Smuggler’s Cove Drive, in the City of Kingston (the “Subject Property”). The Subject Property is a one-and-three-quarters storey, single family detached residential dwelling, located at 249 Smuggler’s Cove Drive, in the City of Kingston. The Subject Property was built in 2000, has a total site area of 0.22 acres, and a total building area of 2,917 square feet ("sq. ft.”).

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, MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”).

3MPAC has assessed the current value of the Subject Property at $732,000 for the 2017 and deemed 2018 taxation years.

4MPAC takes the position that the current value should be $700,000.

5The Appellants have filed appeals for taxation years 2017 and deemed 2018 taxation years with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is the Appellants’ position that MPAC’s assessment of current value is too high and that the correct current value should be $636,000.

6Pursuant to s. 40(11) of the Act, the City of Kingston is a party to this proceeding. Maureen Petersen appeared at the hearing on the City’s behalf. However, she confirmed that she was not actively participating and was there to observe the hearing. Ms. Petersen asserts no position on the issue of current value.

7Section 44(3) (b) of the Act, directs the Board to adjust 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.

8MPAC’s representative takes the position that an equitable reduction is not required.

9The Appellants take the position that an equity reduction is not required based on his proposed current value of $636,000. If the value is higher, the Appellants believe that an equity reduction is required.

10The City asserts no position on the issue of equity.

Decision

11At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value for the 2017 and 2018 tax years is $700,000. Pursuant to s. 44(3) (b) of the Act, an equitable reduction of this value is not required. Therefore, the Board reduces the returned assessment from $732,000 to $700,000 for the 2017 and deemed 2018 taxation years.

Relevant Legislation

12The Act:

1. “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.

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

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.

Burden of proof

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.

41. (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.

DISCUSSION, ANALYSIS AND FINDINGS

Issue No. 1: The issue to be determined on this appeal is what is the correct current value of the Subject Property for the taxation years 2017 and 2018?

MPAC’s Submissions and Evidence

13Jack Tyhuis represented MPAC (“MPAC’s representative”). He presents a Valuation Report, dated December 14, 2017, which he prepared and testifies to information contained therein.

14MPAC’s representative provides an area analysis of the Subject Property. He states that the Subject Property is uniquely located in the south-west end of the City of Kingston within 2 kilometres of the largest conservation area known as Lemoine’s Point.

15MPAC’s representative testifies that the Subject Property is bounded by a golf course and a municipally operated airport to the north, Lake Ontario to the south and Bayridge Drive to the east.

16MPAC’s representative states that the Subject Property has no direct access to the waterfront, but benefits from the close proximity and public access to the shores of Lake Ontario.

17MPAC’s representative states that aside from some added vehicular traffic from the airport and golf course, the area is mostly a low traffic area.

18MPAC’s representative notes that the airport has two runways that run perpendicular to the Subject Property and are located a kilometre away from the Subject Property. He also states that aircrafts do not land or take-off in the air space above the Subject Property.

19MPAC’s representative testifies that the Subject Property receives no negative adjustments because it is not abutting and/or within close enough proximity to the golf course and airport to warrant an adjustment.

20MPAC’s representative testifies that prior to this hearing, he analyzed the sales of eight suggested comparable properties (seven of which are bungalows) located in Smuggler’s Cove Drive and arrived at a value of $710,000 ($243.40 per sq. ft.). This value was offered to the Appellants and it was rejected.

21MPAC’s representative testifies that because of limited sales of two-storey single family homes in the Smuggler’s Cove neighbourhood, he accepts the Appellants’ proposed cost of $240 per sq. ft. because it was determined by sales of one-storey and two-storey single family homes in and around Smuggler’s Cove.

22MPAC’s representative testifies that he also considered the fact that two-storey single family homes like the Subject Property command a lower value than a one-storey. Therefore, he felt that the proposed cost of $240 per sq. ft. is reasonable.

23MPAC’s representative states that although he accepts the proposed value, he and the Appellants disagree on the total building area of the Subject Property. He noted that the disagreement is that MPAC uses external measurements and the Appellants’ position is that it should be based on internal measurements.

24In regard to the total building area, MPAC’s representative takes the position that the total building area of the Subject Property is 2,917 sq. ft., based on external measurements. He explains that MPAC uses external measurements for the preparation of assessments for all properties in the Province of Ontario. He further explains that the internal designs and layout (e.g. number of bedrooms and bathrooms, open concept, open to ceiling space etc.) are matters of preference for property owners and potential buyers. MPAC’s representative argues that internal designs and layout have no impact on the total building area of the Subject Property, because MPAC uses external measurements.

25Based on external measurements MPAC’s representative takes the position that the total building area is 2,917 sq. ft. and that the current value should be $700,000 ($240 x 2,917 sq. ft.).

Appellants’ Submissions and Evidence

26The Appellants testify that they concur with MPAC representative that the cost of $240 per sq. ft., based on sales evidence should be applied to the Subject Property. However, the Appellants disagree with MPAC representative’s position that the total building area of the Subject Property is 2,917 sq. ft., based on external measurement. The Appellants takes the position that the total building area is 2,650 sq. ft. based on internal measurements.

27In support of their argument, the Appellants present an Appraisal Report for the Subject Property, dated January 1, 2016 and prepared by Stephen Rayner, Appraiser with the Appraisal Institute of Canada for approximately 15 years.

28The Appellants called Mr. Rayner as a witness and no objections were raised by MPAC. As such, Mr. Rayner testifies to the information contained in the Appraisal Report.

29Mr. Rayner testifies that he calculated the liveable floor space based on internal measurement to be 2,650 sq. ft. (1,635 sq. ft. on the first floor + 1,015 sq. ft. on the second floor). In support of this standard of measurement, Mr. Rayner cited the Appraisal Institute of Canada Guidelines for Residential and Commercial Measurement, and directed the Board to” Example 15, Two Storey with Open Foyer to Second Level”. The guideline states “Measure length times width of Area A foyer only. Open space on Area B is not considered liveable floor area”. However, on cross-examination, Mr. Rayner testifies that the Appraisal Institute Guidelines provide no guidelines on how to value open to above space and left it up to the individual appraiser’s judgment.

30Mr. Rayner testifies that as an appraiser, his mandate is to appraise properties. He states that he has been, and never came across the issue of external measurement. He testifies that he gets request to give advice to real estate firms in terms of value, and advices on other features of properties. He states that although it is not mandatory to give the actual measurements and features (e.g. cathedral ceiling) of a property, he has the flexibility as an appraiser to be as open to requests as he deems necessary.

31Mr. Rayner testifies that he did not identify any open to above space in any of the nine comparable properties used in the appraisal report and that he did not inspect and/or measure the total building area of these comparable properties. Instead, he relied on the total building area contained in MPAC’s reports (which is based on external measurements) and in reports obtained from the Teranet Inc. website (He explained that Teranet is the exclusive provider of Ontario’s online property search and registration). As a result, Mr. Rayner was unable to confirm whether or not the total building area of these nine comparable properties used his Appraisal Report is based on internal or external measurements.

32Finally, the Appellants testify that in 2000 when he was looking to purchase his home, he was offered homes of the same model and quality that were for sale at 625 and 637 Roosevelt Drive, with open to above space, and he opted for the Subject Property.

33Based on the evidence, the Appellants argue that the current value should be $636,000 ($240 x 2,650 sq. ft. based on internal measurements).

Findings on Issue No. 1

34In regard to the issue of external measurements, the Board accepts MPAC’s standards of measurements, because it is done consistently throughout the Province of Ontario in the preparation of the assessment roll. Therefore, the Board finds that it is appropriate to apply the same standard of measurement to determine the total building area of the Subject Property.

35In regard to the Appraisal Report, the Board did not rely on it because Mr. Rayner could not categorically confirm the standard of measurement (internal or external measurements) used to calculate the total building area of the nine comparable properties used in his Appraisal report.

36Mr. Rayner clearly states that he did not inspect and did not measure the comparable properties internally, to ensure that the total building area was in fact internal measurement. Instead, Mr. Rayner relied on the total building area of the nine comparable properties which he obtained from MPAC’s reports and the Teranet website, without verifying which standard of measurement (internal or external measurements) was used to determine the total building area.

37The Board also did not rely on the Appellants’ proposed current value because it is calculated based on internal measurements in the Appraisal Report, which the Board did not accept for reasons stated above.

38Also in support of internal measurements and open to above space, the Appellant cited two cases:

i. Ryder-Burbidge v. Municipal Property Assessment Corp. Region 5, [2015] O.A.R.B.D. No. 184 (“Ryder-Burbidge”); and

ii. Alexander v. Municipal Property Assessment Corp. Region No. 13, [2010] O.A.R.B.D. No. 411 (“Alexander”).

39In Ryder-Burbidge, the Board agrees with the Member that “MPAC treats all cathedral ceiling in the province in the same manner, that being that it assesses the open space at the same rate as the remaining second floor area. Therefore the Board finds that there is value in the marketplace for properties with cathedral ceilings.

40In Alexander, MPAC presented the sales of six comparable properties, all with open to above areas as the Subject Property, whereas, at this hearing, MPAC’s representative presented no sales with open to above space for comparison to the Subject Property because there were none available. The Board finds that when there are sales of similar properties (e.g. with open to above space like the Subject Property) which occurred within an acceptable period of time to the valuation date in question, these sales are preferable for comparison to the Subject Property. However, at this hearing, both MPAC’s representative and Mr. Rayner, the Appellants’ witness expressed the same difficulty finding sales with open to above space. In the end, MPAC’s representative and Mr. Rayner agreed on the same comparable properties and agreed on the appraisal value of $240 per sq. ft. Therefore, the Board finds that Alexander provided no additional information to assist the Board in its determination of current value. Therefore, the Board did not rely on Alexander.

41In regard to the two suggested comparable properties at 625 and 637 Roosevelt Drive, presented by the Appellants. The Board finds that these two comparable properties provide no sales evidence to assist the Board in its determination of current value because they were not sold.

42In reviewing all of the above evidence, the Board accepts the cost of $240 per sq. ft. agreed to by MPAC’s representative and the Appellants, based on sale evidence.

43The Board accepts MPAC’s total building area of 2,917 sq. ft. based on external measurements. Applying the cost of $240 per sq. ft. to the total building area of 2,917 sq. ft. results in a current value of $700,000 (rounded).

44Based on all of the evidence, the Board finds the current value to be $700,000.

Issue No. 2: Whether there should be an equitable reduction of the current value pursuant to s. 44(3) (b) of the Act, and, if so, what the amount of this reduction should be?

MPAC’S Evidence

45MPAC’s representative presents an Equity Analysis Report, of 30 sales of similar type properties as the Subject Property, located within 2 kilometres of the Subject Property, and sold over the period January 1, 2014 to December 7, 2017.

46Based on the analysis of these sales, MPAC’S representative testifies that the Level of Appraisal (“LOA”) is 1.007, and the Coefficient of Dispersion (“COD”) is 10.3, which falls within the International Association of Assessing Officer’s (“IAAO”) standards. Therefore, MPAC’s representative takes the position that an equity adjustment is not required to the current value of $700,000.

Appellants’ Evidence

47The Appellants present two suggested properties with open to above spaces, located at 625 Roosevelt Drive, assessed at $553,000 and 637 Roosevelt Drive, assessed at $553,000 in support of an equity reduction. However these two suggested properties were not sold and the Appellants failed to provide the necessary information (Assessment to Sale Ratio “ASR”) to assist the Board in its determination of equity.

Board’s Analysis and Findings

48Based on all of the above evidence, the Board finds that MPAC’s representative presents the best evidence in support of equity, with the analysis of the sales of 30 similar type properties as the Subject Property. The analysis shows that these sales have a median ASR of 1.007 and COD of 10.3 percent, which falls within the acceptable standards of the IAAO.

49On the contrary, the Appellants present two suggested properties which were not sold and failed to provide the necessary information (ASR) to assist the Board in its determination of equity.

Conclusion

50Based on all the evidence, the Board accepts the findings of MPAC’s equity analysis and finds that an equity adjustment to the current value is not required. Therefore, the Board reduces the returned assessment from $732,000 to $700,000 for the 2017 and 2018 taxation years.