Assessment Review Board

Commission de révision de l'évaluation foncière

ISSUE DATE: September 06, 2018

FILE NO.: WR 154343

Assessed Person(s): Donald Rennick and Susan Elizabeth Rennick

Appellant(s): Donald Rennick and Susan Elizabeth Rennick

Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 28

Respondent(s): City of North Bay

Property Location(s): 392 Surrey Drive

Municipality(ies): City of North Bay

Roll Number(s): 4844-050-077-61200-0000

Appeal Number(s): 3235053 and 3314203

Taxation Year(s): 2017 and 2018

Hearing Event No. 700567

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

Heard: July 5, 2018 in North Bay, Ontario

APPEARANCES:

Parties	Counsel/Representative
Donald Rennick and Susan Elizabeth Rennick	Donald Rennick
MPAC	Louise St. Jean Brittany Kee
City of North Bay	No one appeared

DECISION OF THE BOARD DELIVERED BY TYRONE D. SKANES

ISSUE

1The appeal before the Assessment Review Board ("Board") was filed by Donald Rennick and Susan Elizabeth Rennick (the "Appellants") in respect of the assessment of a single, detached family home located at 392 Surrey Drive, the subject property ("SP"), for the 2017 and 2018 taxation years.

2The single storey 1,921 square foot ("sq. ft.") home was built in 1982 but was renovated in 1998 and has an effective year built of 1987. It is situated on a lot size of 12,196 sq. ft. It has a basement of 1,921 sq. ft. of which 1,042 sq. ft. is finished. The Quality Class ("QC") is 7.0. There is an attached garage measuring 539 sq. ft. There is no sidewalk on the street and there are no curbs or gutters.

3Louise St. Jean, representing MPAC, entered five sales of comparable properties that she said were good comparators to the SP. She said she used the direct sales comparison approach to value to determine the current value assessment ("CVA") of the SP at $429,000 for the 2018 taxation year and $398,000 for the 2017 taxation year. She advised that the 2018 value was higher due to her having corrected data for the garage, kitchen and porch. She said that despite suggesting a higher value for the 2018 taxation year she was recommending the Board reduce the 2018 CVA to $398,000 and confirm the 2017 CVA at that value.

4Ms. St. Jean also advised that the initial assessment of the SP returned at $431,000. However, once the corrected data was obtained and inputted into MPAC's database the corrected assessment of $429,000 was set.

5Donald Rennick, representing himself and his wife, did not enter any sales evidence to support his request for a reduction of the SP's assessment to $380,000. He said that, in his opinion, sales evidence was not required to determine the SP's value, despite the Board explaining it was a legislated requirement. He said that he believed that an assessment to assessment analysis of comparable properties to the SP was a more fulsome method of determining comparability. He said that his requested reduction to $380,000 was within the ranges of MPAC's sales and assessed values of their comparable properties. He believed that he should benefit from being within those ranges and have the CVA of the SP reduced to $380,000.

6The issue before the Board for determination is whether the assessment of the SP for the 2017 and 2018 taxation years are 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) Act to determine the current value of the land and have reference to the value at which similar lands in 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.

8The Board finds that the current value of the SP as of January 1, 2016, is $419,000 (rounded) and finds that it is equitable with the assessments of similar lands in the vicinity. This value is lower than the current value of $429,000 that MPAC returned for the 2018 taxation year. However, it is higher than the $398,000 that MPAC recommended to the Board. MPAC is not seeking a higher assessment. Therefore, the Board will reduce the CVA from $429,000 to $419,000 (rounded) for the 2018 taxation year and confirm the assessment of $398,000 for the 2017 taxation year.

REASONS FOR DECISION

Relevant Legislation

9Section 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.

10Section 19.(1) of the Act states:

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

11Section 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

12Ms. St. Jean's valuation report was entered into evidence as Exhibit 1 and her Equity Analysis as Exhibit 2. She testified that the direct sales comparison approach to value was used in determining the current value of the SP.

13Ms. St. Jean entered the sales of five comparable properties that she opined were good comparators to the SP. She said that all of the comparable properties were in the same homogenous neighborhood and in fact were within a kilometre of each other. Only three of the comparable properties were single story home, as is the SP. Only Sales 1 and 2 occurred within one year on either side of the valuation date.

14Ms. St. Jean's Equity Analysis Report examined the sales of 30 similar lands located within one kilometre of the SP. She testified that the median Assessment to Sales ("ASR") ratio returned at 1.0, which indicated to her that similar lands in the vicinity were being assessed at or near their correct current values.

15Ms. St. Jean summed up her presentation by asking the Board to find the CVA for the SP to be $398,000 for both the 2017 and 2018 taxation years.

16On cross-examination Mr. Rennick asked the assessor if she had included an increase to the CVA of the SP of $8,488.44 to account for air conditioning and she replied yes. He asked her to explain this and produced a receipt for the unit purchased in 2000 for $2,963.90. She said that their method of valuing an amenity was not based on what it cost but what value it added to the assessment. When asked to clarify how this value was determined the assessor said that it was returned by their computer program. Mr. Rennick said that he called around and inquired of suppliers as to the cost for a new air conditioner and was told it could cost between $3,500 to $4,000, He asked the assessor if she thought this was reasonable and she said that she did not know as she was unaware of the cost associated with a new system.

Appellant's Position and Evidence

17Mr. Rennick, representing himself and his wife, entered a documentary package into evidence as Exhibit 3. He did not enter any sales evidence to support his request for a reduction of the CVA to $380,000.

18Mr. Rennick said that while he understood the concept and definition of "current value" he disagreed with it. He similarly disagreed with the concept of an assessment to sales ratio, preferring instead to focus on an assessment to assessment analysis. He believed that as MPAC was proposing assessments of comparable properties the Board should make its determination of value based on what MPAC said a property was worth, rather than what it sold for.

19Mr. Rennick described his street as a main thoroughfare that is used as a conduit into the Wallace Heights development. He said that traffic is fairly steady in the morning and after work hours and suggests that the traffic flow has a negative effect on the SP value.

20Appendix "A" of Exhibit 3 is an e-mail from the assessor to Mr. Rennick, sent on December 6, 2017, outlining increases to the assessment of the SP and what those increases pertained to. Included in this were changes to the first floor area, the basement area, an interior renovation and added value for having air conditioning, amongst other increases. The total of the increase was $32,507 and was added to the previous CVA of $398,647 for a new CVA of $431,000 (rounded).

21In Appendix "C" of Exhibit 3 Mr. Rennick provided an analysis of six properties using the assessments to arrive at an average value per sq. ft. and arriving at a value in comparison to the SP. In Appendix "D" of the same exhibit he provided a description of the properties used in Appendix "C" but did not include any sales evidence for any of these properties.

22Mr. Rennick summed up his analysis by opining that his final estimate of current value of the SP is $380,000 based on an assessed per sq. ft. value of $197.81 applied to the square footage of the SP of 1,921.

Board's Deliberations – Jurisprudence

23In his submissions to the Board the Appellant provided a website that he said had two prior decisions of the Board that he wished the Board to consider. He did not advise the Board of what the substance of these decisions were or what issues he wished considered. On July 27, 2018 the Appellant was notified by the Board, via email that submissions of this type would not be accepted. The Board expected the parties to enter whatever evidence and submissions they wished considered at the time of the hearing. If he wished the Board to consider those decisions then he had seven business days to provide those decisions to the Board. As of August 17, 2018 the Appellant had not responded to the Board's direction.

Board's Deliberations - Current Value

24The best evidence of current value is the sale of the SP 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 properties in the vicinity to determine current value.

25The Board has carefully considered the testimony of the parties and the documentary evidence tendered as exhibits.

26The Board, when comparing properties, does not expect exactness or sameness. Therefore, the Board looks at similarity of characteristics, amenities and location to determine comparability.

27The 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 during the ideal time period.

28MPAC entered the sales of five properties in close proximity to the SP that the assessor opined were good comparators to the SP.

29The Board disagrees that all five properties are good comparators to the SP for the following reasons. The SP is a single story structure and Sales 3 and 4 are two storey structures. In the Board's opinion, this factor renders them unsuitable for comparison.

30The Board usually considers properties that have sold within a year on either side of the valuation date. Sale 5 sold in 2012. This sale is too far removed from the valuation date of January 1, 2016 to be of use to the Board. Therefore, the Board will not consider Sales 3, 4 and 5.

31This leaves the Board with Sales 1 and 2 for consideration. These properties are reflected below in Table 1.

32The Appellant did not enter any comparable sales into evidence for the Board to consider. Instead, he focused his argument on comparing his assessment to the assessments of other properties in the vicinity. Mr. Rennick said that while he understood that sales evidence was required, for both determining current value and when considering equity, he disagreed. He believed that an assessment to assessment analysis was more appropriate and that is why he focused his evidence in Appendices "C" and "D" of Exhibit 3 on that concept. In paragraph 19 of Exhibit 3 he provided an opinion of how an equitable assessment would be achieved by using a per square foot comparison of assessment of Properties three and 11 to the SP, as shown in Appendix "C".

33The Board rejects the argument on determining current value by using property assessments. Current value is clearly defined as; "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." There is a clear delineation between what a property's current value is and the value at which it is assessed.

34The Board similarly rejects the Appellant's argument on how equity is determined. MPAC entered an equity analysis where the sales of 30 similar lands in the vicinity were examined and it was determined that the median ASR was 1.0. The International Association of Assessing Officers standards state that a level of appraisal, for the purpose of the equity test, should fall within a range of 0.90 to 1.10, while MPAC takes the position that equity is achieved if the median ASR falls within a range of 0.95 to 1.05. A median ASR of 1.0 is considered ideal. The Appellant's argument that equity can be achieved by using per square foot of assessment calculation for two properties is not, in the Board's opinion, valid. An assessment to sales ratio, not an assessment to assessment ratio as argued by the Appellant, is used when determining whether similar lands are being assessed at their correct current values.

35Therefore, the Board rejects the Appellant's arguments on both current value and equity.

36The Appellant also argued that there should be some consideration given to his request to have the increase attributed to the air conditioning reduced. He said that he paid far less for the unit when he initially purchased it and could not understand MPAC's position that it was the added value that was being assessed, not the cost of the unit itself. The Appellant said that he called different suppliers and obtained pricing on air conditioning units, which were far less than MPAC's added value. However, the only receipt that he had was one from the original purchase in 2000 and he did not present this to the Board for consideration. Therefore, the Board cannot consider this argument.

37MPAC's comparable properties are reflected below in Table 1.

Table 1

Property	Building Size (Sq. ft.)	Lot Size (Sq. Ft.)	Effective Year Built	Quality Construction (QC)	Sale Date	Time Adjusted Sale Price (TAS)	Current Value Assessment (CVA)
Subject Property	1,921	12,196	1987	7.0			$429,000
Sale 1	1,614	6,000	1991	7.0	April 2016	$346,523	$374,000
Sale 2	1,602	6,000	1988	7.0	June 2015	$356,191	$369,000

38As can be seen by Table 1 the two properties that the Board considered compare favourably to the SP in many respects. The effective year built is within four years of each other, there is a slight difference in building size and the QC is 7.0 for all three properties. The lot size of the SP is slightly double the lot size of the comparable properties and this may explain the SP having as higher assessment.

39The 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 $218.51. When this value is applied to the square footage of the SP at 3,760, a value of $419,757.71 is returned.

40The Board finds that the current value of the SP is $419,000 (rounded).

Board's Deliberations – Equity

41MPAC entered an equity study into evidence whereby the sales of 30 similar properties located within 1.0 kilometre of the SP were analyzed. The assessor determined that the median ASR returned at 1.0 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 and the Board accepts this equity analysis.

42The Appellant submitted an opinion where he used two properties from his submission and said that per square foot analysis of the assessment of the properties, in comparison to the SP, would be sufficient to test whether had been achieved. The Board disagrees and rejects this argument. The purpose of the equity test is to determine if similar lands in the vicinity are being assessed at their correct current values. Current value has already been defined and it involves sales of relevant properties. Therefore, an ASR tests the assessment of a property in relation to sales of similar lands and is the better evidence.

CONCLUSION

43The Board finds that the current value of the SP as of January 1, 2016, is $419,000 (rounded) and finds that it is equitable with the assessments of similar lands in the vicinity. This value is lower than the current value of $429,000 that MPAC initially found. However, it is higher than the $398,000 CVA that MPAC recommended to the Board. MPAC is not seeking a higher assessment. Therefore, the Board will reduce the assessment from $429,000 to $419,000 (rounded) for the 2018 taxation year and confirm the assessment of $398,000 for the 2017 taxation year.