Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 05, 2018

FILE NO.: WR 153145

Assessed Person(s): Julie Desaulniers, Bonnie Helton and Margaret Magoon

Appellant(s): Julie Desaulniers

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 30

Respondent(s): Town of Northeastern Manitoulin and the Islands

Property Location(s): Island TP781 PCL 975 RPMR15

Municipality(ies): Town of Northeastern Manitoulin and the Islands

Roll Number(s): 5119-010-001-10100-000

Appeal Number(s): 3196175

Taxation Year(s): 2016

Hearing Event No.: 695876

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

Heard: May 3, 2018 in Little Current, Ontario

APPEARANCES:

Parties	Representative
Julie Desaulniers, Bonnie Helton and Margaret Magoon	Julie Desaulniers
MPAC	Maria Gianfrancesco
Town of Northeastern Manitoulin and the Islands	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

Background

1Julie Desaulniers is the owner of Island TP 781 (the “subject property”), which is a seasonal/recreational dwelling – first tier on water located in Northeastern Manitoulin and the Islands at the beginning of McGregor Bay. This is a part-island consisting of 1.63 acres, upon which has been built a rustic one-storey cabin of 678 square feet (“sq. ft.”). The property is accessed by water only. It has no hydro and no heat. There is permanent docking on the island, although photographs depict a high concentration of weeds growing underwater around the dock. The island itself is rocky and covered with low brush. The cottage itself is made of wooden boards which are cracked and pitted due to age and weather. The cottage was built in 1969, which makes it almost 50 years old.

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 2013 to 2016 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2012. (“current value”).

3MPAC has assessed the current value of the subject property at $187,000.

4Ms. Desaulniers (“the Appellant”) has filed appeals for taxation year 2016 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is her position that MPAC’s assessment of current value is too high and that the correct current value is between $100,000 and $125,000. At this hearing, MPAC takes the position that its assessed value is correct at $187,000.

5Pursuant to s. 40.(11) of the Act, the Town of Northeastern Manitoulin and the Islands is a party to this proceeding. However, it did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on its behalf.

6Section 44.(3)(b) of the Act, directs the Board to reduce 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 of the municipal tax burden according to the value of the property possessed by each ratepayer.

7MPAC takes the position that an equitable reduction is not required. The Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.

8At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value of the subject property for the 2016 tax year is $125,000. An equitable reduction of this value is not required.

Relevant Legislation

9The 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.

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

3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

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.

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.

ISSUE

10The issue to be determined on this appeal is the correct current value of the subject property for the taxation years 2016.

Discussion, Analysis and Findings

MPAC’S Evidence

11Maria Gianfrancesco represented MPAC. She prepared the Valuation Report and gave evidence on behalf of the assessor. The property is located in McGregor Bay and Bay of Islands, about 10 to 15 minutes by boat from the access point.

12Ms. Gianfrancesco explained that the assessment technique used for this property, and most commonly used in residential assessment, is the direct sales comparison. In order to make the values of the comparable properties as accurate as possible to the valuation day (January 1, 2012), Ms. Gianfrancesco prepared an analysis of price changes over time based on 480 sales of residential properties in the vicinity from January, 2009, to December, 2012. The technique is called the Sales Ratio Trend Analysis. She determined the price changes on a monthly basis over this 48 month period, resulting in time adjustment factors for each month. Overall, properties increased in value by 13.61 per cent. By applying the time adjustment factors to her three comparable properties, Ms. Gianfrancesco was able to estimate the sales prices as of January, 2012.

13Ms. Gianfrancesco chose three comparable island properties for her analysis of current value. The properties and their relevant details are set out in the following chart.

TABLE A: DIRECT COMPARISON OF PROPERTY FEATURES (MPAC)

Feature	Subject Property	(B) TP 1700	(C) TP 2780	(D) TP 2794
Sale Date		Nov. 2010	May, 2011	Oct., 2010
Sale Amt.		$190,000	$292,198	$195,000
Time Adjusment Factor		1.037	1.020	1.040
Time Adjusted Sale Amt.		$196,981	$298,066	$202,716
Effective Site Area	1.63 ac.	1.59 ac.	3.04 ac.	1.74 ac.
Effective Year Built	1969	1952	1966	1962
Cabin Area	609 sq. ft.	329 sq. ft.	788 sq. ft.	490 sq. ft.
No. of Bedrooms	2	1	1	1
Hydro	No	No	Yes	Yes
No. of Secondary Structures	0	0	1 – 304 sq. ft. cabin	1 – 146 sq. ft. shed
Heat Type	None	None	None	None

14Note that each building is one storey in height and none of the properties has air conditioning. All the properties are water access only.

15Ms. Gianfrancesco gave the opinion that Property C, Island TP 2780, was superior to the subject property while the other two properties were relatively comparable.

16The site area of the subject property is close in size to the properties described as Sales B and D. The site area of Sale C is approximately twice that of the subject property and the cottage is larger; this property also has a secondary cabin of 304 sq. ft. Because this property is superior in most regards, it is not directly comparable to the subject property, but serves to set an upper limit in value.

17The other two Sales, B and D, are more similar to the subject property in size. They sold within one month of each other, and the sale prices were similar: $190,000 for B and $195,000 for C. The amenities are similar to the subject property except that Sale D has a secondary structure in the form of a shed and also has hydro available. Ms. Gianfrancesco offered the opinion that the very similar sales prices of Sales B and D would indicate that the absence of hydro does not negatively affect the selling price. Sale D was sold for only $5,000 more than Sale B.

18Ms. Gianfrancesco presented an equity analysis report based on calculations of the assessment-to-sale-ratios (“ASR”) in respect of 112 residential properties in the vicinity. The median ASR was 0.99, indicating a high degree of accuracy in assessment and therefore not requiring an adjustment of the current value of the subject property on the ground of equity.

MPAC’s Submissions

19Relying on its evidence, MPAC submits that the correct current value for the taxation years 2016 is $187,000.

Appellant’s Evidence

20The Appellant represented herself, and she was her sole witness.

21The Appellant filed a number of documents at the hearing, including photographs of the interior and exterior of the property; her extensive notes in connection with various conversations she had had with various government bodies, including the Assessment Review Board (“Board”); information on comparable sales, and an appraisal report dated October 26, 2015.

22Looking first at the comparable sales evidence, the Appellant collected and presented information from local real estate sales for her comparative property sales. While she had gleaned information on a number of sales, she selected three properties for comparison with her own. The relevant details, taken from the Appellant’s verbal testimony and information provided by a realtor, are set out in Table B.

TABLE B: APPELLANT’S COMPARABLE SALES

Feature	Subject Property	(1) TP 2300	(2) TP 1977	(3) TP 730
Sale Date		Jul 2010	May 2012	Nov 2014
Sale Amt.		$189,000	$160,210	$165,000
Time Adjustment Factor		1.048	0.988	Unknown
Time Adjusted Sale Amt.		$198,172	$158,287	Unknown
Effective Site Area	1.63 ac.	2.6 ac	(smaller than subject)	1.56 ac.
Effective Year Built	1969	1970 (approx.)	2000	1
Cabin Area	609 sq. ft.	1,024 sq. ft.	Unknown	968 sq. ft.
No. of Bedrooms	2	3	3	unknown
Hydro	No	Yes	Yes	Yes
No. of Secondary Structures	0	2	Unknown	4
Heat Type	None	None	Unknown	Fireplace
Septic	None	Yes	Yes	Yes

23Note that the third property, TP 730, is described by the Appellant as her closest neighbor and a single-owner island, unlike her own and the other two comparable properties.

24The Appellant also provided an appraisal prepared by Stephen Rolston of J.A. Rolston Ltd. Real Estate Brokerage. The report is dated October 26, 2015. Mr. Rolston physically inspected the property on that date, and provided two estimates of value: April 10, 1980, and October 26, 2015.

25Mr. Rolston described the primary structure as being in “fair condition with an estimated effective age of 35 years and a remaining economic life of 5 to 10 years” [as of 2015]. While he provided a number of comparable sales, both part islands like the subject property and single-owner islands, their transaction dates were generally in 2014 and 2015 and were not relevant to the valuation day of January 1, 2012.

26For 2015, Mr. Rolston’s opinion of the value of the subject property was $100,000. According to the Appellant, his opinion of value for the subject property in 2012 was $125,000.

27The Appellant testified about quality of construction and took exception to the fact that MPAC describes the construction of her cottage as “average.” In that respect she provided a number of photographs which depicted the following details relevant to this topic:

(a) The photographs show that the wood on the exterior of the building is rotten in many places. Wooden screens are stapled together.

(b) The one bedroom is in the back section of the cabin. It is not a separate room.

(c) The cottage is of log construction, and the interior bunk beds are also log construction with boards on top for the sleeping platforms.

(d) There are no traditional cupboards in the kitchen area; everything is kept in the open on shelves or hung on walls.

(e) MPAC records this cabin as having two bedrooms. However, one bedroom is at the back of the cottage and somewhat isolated from the remainder of the structure, despite not being a separate room. The other sleeping areas are in the main room which also houses the kitchen and living room.

28The Appellant’s photographs of the dock area show a preponderance of underwater weeds on all sides of the dock.

29When asked about the cost of upgrading services to the property, including hydro and septic, the Appellant testified that she had made inquiries of companies which install these systems. She testified that made notes concurrently with making the phone calls, and entered her notes into evidence. On the issue of having hydro brought to the island, she quoted Steve Salt from Hydro One. This gentleman gave her a rough estimate of $35,000 just to get cable to the island, plus more charges for installing it throughout the cabin. When she later asked Mr. Salt what it would have cost in 2012, he guessed approximately $30,000, not including the wiring. The Appellant subsequently spoke with an electrician and was advised that wiring the cottage in 2012 would have cost her approximately $9,000.

30When asked what she would list the property for currently, the Appellant said $125,000.

Appellants’ Submissions

31Relying on her evidence, the Appellant submits that the correct current value for taxation years 2016 is $100,000 to $125,000.

32The Appellant provided an appraisal by a real estate broker, Mr. Rolston, who noted that the value in 2015 would have been $100,000. The Appellant testified that Mr. Rolston advised her that the value in 2012 would have been $125,000.

Findings on Issue 1

33The Board finds that the condition of the structure is poor overall. The construction of the cabin, while being a log home, is simple construction with at most two rooms without insulation and lacking hydro for lighting and cooking. The main room houses several bunk beds, the kitchen area, and a family room. The logs, visible in photographs provided by the Appellant, are in poor condition on the outside of the building, displaying large sections of rot. The building lacks a septic system and plumbing.

34The subject property is not a single-owner island, a fact which reduces value when compared to single-owner island properties.

35The waterfront, shown in photographs of the dock, is quite weedy.

36Of the comparable properties provided by MPAC, Sale 2 (TP 1700) is the most comparable property to the subject property. The structure is smaller than the subject property’s cabin, although the site area is approximately the same size. While the property sold for the time-adjusted price of $196,981 in November 2010, it is determined that it is not a good comparison for the subject property. Sale 2 is located on a forested island while the subject property is located on a rocky outcrop, with very few trees and very little protection from the elements. Its condition is poor. No information was provided by MPAC as to the construction quality or condition of the comparable properties submitted. Two of the three comparable properties proposed had hydro, although TP 1700 did not.

37While the Appellant did not provide any documentation respecting the cost of installing hydro and septic on the subject property, the Board accepts the Appellant’s assertion that it would require submarine cable to the island and the attendant costs. The Appellant made careful notes of her various inquiries to service providers, and, even in the absence of actual quotes, the costs verbally communicated to her were significant. While her evidence is hearsay, she kept records of her conversations when they took place, which gives hearsay comments more weight than if she quoted from memory. For a potential purchaser, the presence of absence of hydro and a septic bed would be important considerations. The Board accepts that the absence of services would indeed negatively affect the value of the subject property.

38The evidence provided in the appraisal report is given a fair amount of weight for the reason that its author inspected the property, including the interior of the cabin. His estimate of value in 2015 was $100,000; however, he concluded that prices had come down since 2012, and he gave the opinion that the value of the subject property in 2012 would have been $125,000.

39Mr. Rolston’s comparable properties were generally sold in 2014 and 2015. However, the sales prices ranged from $100,000 to $165,000 at that time. Notably, the sale for $165,000 included hydro and septic, while the sales for $100,000 and $125,000 did not. One further sale, Part Island TP 2693, which sold for $130,000 in March, 2014, lacked data about amenities such as hydro and septic.

40Because Mr. Rolston’s report included an inspection of the interior along with details about the deterioration of the exterior, the Board finds it to be a more thorough examination of the subject property than MPAC undertook.

DECISION

41Following an analysis of the evidence, and preferring the evidence of the appraisal report presented by the Appellants, the Board reduces the current value of the subject property from $187,000 to $125,000 for the 2016 taxation year.

42An equitable reduction of the current value of the subject property, pursuant to s. 44.(3)(b) of the Act, is not required.