Sharon Leone Latta v. Municipal Property Assessment Corporation, 2018 CanLII 84489

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: September 06, 2018

FILE NO.: WR 154942

Assessed Person(s): Sharon Leone Latta

Appellant(s): Sharon Leone Latta

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 26; The Municipality of Lambton Shores

Property Location(s): 10168 Meadowlilly Crescent

Municipality(ies): Municipality of Lambton Shores

Roll Number(s): 3845-520-030-04700-0000

Appeal Number(s): 3256749 and 3313596

Taxation Year(s): 2017 and 2018

Hearing Event No.: 702066

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

Heard: August 8, 2018 in Thedford, Ontario.

APPEARANCES:

Parties	Representative
Sharon Leone Latta	Anne Walkinshaw
MPAC	Jane Sokol-Kennedy, William Somerville
Municipality of Lambton Shores	No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

BACKGROUND

1This is an appeal of the assessed value of 10168 Meadowlilly Crescent (“subject property”). The Appellant’s representative, Anne Walkinshaw, argues that the assessment, as of the January 1, 2016 valuation day, should be $337,500.

2MPAC’s representatives, William Somerville and Jane Sokol Kennedy, submit that the assessment as returned of $456,000 for the 2017 and 2018 taxation years should be reduced to $366,000.

3For the reasons stated below and pursuant to s. 44(3)(a) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”), I find that the current value of the subject property, as of the January 1, 2016 valuation day, is $350,000. The evidence demonstrates that, pursuant to s. 44.(3)(b), a reduction is not required to make the assessment equitable with that of similar properties in the vicinity. Accordingly, the assessment as returned of $456,000 is reduced to $350,000 for the 2017 and 2018 taxation years I the residential property class.

LEGISLATION

4Section 44.(3)(a) of the Act requires the Assessment Review Board (“Board”) to “determine the current value of the land”. Current value is defined in s. 1 as “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”. That is, I must determine what the property would have sold for in an arm’s length transaction on the valuation day, set pursuant to s. 19.3 of the Act, which, in this case is January 1, 2016 for the 2017 and 2018 taxation years.

5Once I have determined the current value, s. 44.(3)(b) requires that I “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” but only if that adjustment would result in a reduction of the assessment.

Current Value

6The subject property is located in an area known as the Merrywood Meadows Subdivision (“Merrywood”) in the municipality of Lambton Shores. Merrywood is located east of Lake Huron and southeast of Grand Bend.

7Ms. Walkinshaw made extensive submissions and arguments much of which related to MPAC’s inconsistencies, clerical errors and incorrect assessments. She argued that because of these inconsistencies and errors, property owners cannot have confidence in MPAC’s assessments. While I have heard all of Ms. Walkinshaw’s concerns and arguments, I will confine my reasons to the issues relevant to determining the current value and equitable value of the subject property.

Time Adjustment Factors

8Ms. Walkinshaw raised a number of concerns with regard to the time adjustments MPAC used in its Current Value and Equity Analysis reports. The time adjustment factors were based on over 400 sales in the general region of the subject property and these factors are used to adjust sales from their original sale date to an estimated value on the January 1, 2016 valuation day. The parties agree that the Merrywood real estate market has been somewhat flat compared to other nearby neighbourhoods. In support of this, MPAC’s recommended value of $366,000 includes a $15,000 or - 3% reduction for the unique neighbourhood market. Ms. Walkinshaw testified Merrywood’s market has been flat from 2009 to 2016 and argued that using time adjustment factors garnered from more robust markets will result in exaggerated values in Merrywood. She applied the time adjustment factors to known sales which resulted in present values that far exceed the market values in Merrywood. Because the time adjustment factors are, in large part, based on sales beyond Merrywood and, in part, more robust markets, I find that they are not reliable for properties in Merrywood. Accordingly, I am disregarding the time adjustments for sale properties located in the Merrywood neighbourhood.

Sales Evidence

9Prior to the hearing, the parties participated in at least two settlement meetings. At the commencement of the hearing MPAC’s representative, Jane Sokol-Kennedy, explained that new information regarding the subject property was disclosed at the first settlement meeting. MPAC inspected the subject property, considered the new information and corrected its errors. Ms. Sokol-Kennedy is recommending a reduction in the returned assessed value from $456,000 to $366,000. The changes include the following:

a. An adjustment to the total building area from 1,708 square feet (“sq. ft.”) to 1,561 sq. ft.

b. An acknowledgement that Merrywood is a unique market within Lambton Shores and the comparable sales have been narrowed to four sales within Merrywood, three of which were in MPAC’s original analysis.

c. An adjustment because the subject property is located at a low point in the area; there is a problem with drainage and it is subject to flooding.

d. The Appellant has installed two sump pumps in her residence to protect against future flooding.

10Ms. Walkinshaw objected to MPAC’s recommendation, arguing it was made after the disclosure deadline and that MPAC is introducing new evidence. She also refused to acknowledge that the recommendation was made based on data and arguments she provided to MPAC during the disclosure period and at the settlement meetings. However, it is clear that MPAC’s recommendation is based on the Appellant’s evidence. The Appellant presented sales or listing evidence for all four of the properties used in MPAC’s recommendation. As a result, I have accepted MPAC’s sales evidence which supports their recommended value of $366,000.

11The best evidence of current value of a residential property is an open market sale of that property on or near the valuation day. When that evidence is not available, open market sales of similar properties on or near the valuation day are usually the next best evidence.

12MPAC is relying on four sales within Merrywood which are outlined in Table 1. The Appellant is relying on two of these sales, 10180 Meadowlilly Crescent and 10211 Pineview Crescent as well as 2 Erin Place. All of the sale properties are similar to the subject property in that they are not water front, they have single storey residences, and are a 7 quality of construction.

Table 1

Feature	Subject Property	10158 Meadowlilly Drive	10180 Meadlowlilly Crescent	10180 Merrywood Drive	10211 Pineview Crescent	2 Erin Place
Lot Front and Depth (ft.)	88.5 x 198.43	95 x 142	78 x 205	79 x 196	78 x 194
Lot Size (acre)	0.40	0.63	0.37	0.36	0.35	0.23
House Size (sq. ft.)	1,561	1,842	1,903	1,767	1,848	1,627
Finished Basement Size (sq. ft.)	0/1,561	1,842	79/1,909	805/1,817	844/1,953	0/1,663
Garage (sq. ft.)	499	486	528	721	488	513
Year Built	2003	2008	2005	2004	2004	2011
Sale Date	N/A	September 2017	August 2016	July 2012	September 2016	October 2012
Sale Price	N/A	$490,000	$425,000	$450,000	$420,000	$373,000
Septic/Sewers	Septic	Septic	Septic	Septic	Septic	Sewers

13Some Merrywood sales submitted by the parties were for waterfront properties located on Ausable River. I am not considering waterfront properties in my analysis because they are not directly comparable to the subject property which is not located on a waterfront.

14Ms. Walkinshaw argued that the most comparable property to the subject is 2 Erin Place, which was included in MPAC’s initial reports. It is not located in Merrywood. It has a smaller lot than the subject property but a similar house size and an unfinished basement. It is eight years newer than the subject property and it has sewers.

15Ms. Walkinshaw called Robert Sharen as an expert witness. Mr. Sharen has 44 years of real estate experience in the Grand Bend community and is a licensed broker. He was a member of the Planning Board for the former Village of Grand Bend and the County of Lambton and has served on a number of municipal committees. I accept that Mr. Sharen is qualified to provide opinion evidence relating to real property. Mr. Sharen explained that Merrywood has no sewers whereas 2 Erin Place does. He explained that sewers are an important variable in Lambton shores and the lack of sewers creates a separate and less desirable market from other neighbouring Lambton Shores areas that have sewers. He testified that the 2016 value difference for sewers in the Lambton area is $25,000.

16I agree with Ms. Walkinshaw that 2 Erin Place is very similar to the subject property. It has a time adjusted sale price of $409,924. Reducing this value by the value of the sewers results in a sale price of $385,000 ($409,924 - $25,000). Using this sale, I find that the subject property would likely sell for $385,000.

17With regard to the remaining sale properties in Table 1, I am disregarding the September 2017 sale of 10158 Meadowlilly Drive and the July 2012 sale of 10180 Merrywood Drive. Notwithstanding the ‘flat market’ in Merrywood, I find that these sales occurred too far from the January 1, 2016 valuation day to use.

18The remaining two sales occurred eight and nine months from the valuation day which is close enough to that day to provide confidence when determining the subject property’s current value. 10180 Meadowlilly is similar to the subject property in age and has a slightly smaller lot. However, based on the larger residence and garage, I find that it is superior to the subject property and, therefore, the subject property would sell for less than $425,000.

1910211 Pineview Crescent is similar in age and garage size and has a smaller lot. However, based on the larger residence, I find this property to be superior to the subject property and, therefore, the subject property would sell for less than $420,000.

20Based on the sales evidence, I find that the subject property would likely sell for $385,000 and definitely for less than $420,000.

Flooding

21The parties agree that there is an issue with flooding due to the subject property being the low point in the neighbourhood. The basement has flooded at least twice and the Appellant has installed two separate sump pumps in the basement. The Appellant is seeking a 10% reduction in value for the drainage and flooding issues while MPAC has recommended a 5% reduction.

22When asked about the subject property’s drainage issue Mr. Sharen’s opinion for the cost-to-cure was $35,000. This amount includes the cost to replace the existing pumps, a generator in case there is a power failure, and the construction of French drains on either side of the property. He explained that the municipality would arrange for the French drain work but the costs would be borne by the Appellant. I accept Mr. Sharen’s opinion of the cost-to-cure the drainage issue.

23Accordingly, I find the current value of the subject property is $350,000. This value was obtained by taking the most likely sale value of $385,000 based on the sale of 2 Erin Place, and deducting $35,000 for the cost-to-cure the subject property’s drainage issue.

Equity

24Ms. Sokol-Kennedy submitted an equity analysis report which looked at the level of assessment of 30 residential properties that sold between January 2012 and December 2016 within 5 kilometres of the subject property. The median assessment to sale ratio for these 30 sales is 1.021 with a co-efficiency of dispersion of 13.1 which, she argues, indicates that no adjustment is necessary for the purpose of equity. As with the time adjustments used in MPAC’s current value evidence I am concerned with the accuracy of the time adjustment factors.

25Ms. Walkinshaw presented evidence that a number of property owners in the Merrywood have sought and been granted reductions to their January 1, 2016 assessed values. While it appears that some properties are over-assessed in the Merrywood neighbouhood, the evidence does not show that MPAC is tending to assess properties below their market values.

26Based on the evidence presented, I find that the current value requires no adjustment for the purpose of equity.

CONCLUSION

27I find that the current value for the 2017 and 2018 taxation years is $350,000 and that an adjustment is not warranted for the purpose of equity.

28I therefore I reduce the assessment for the 2017 and 2018 taxation years from $456,000 to $350,000 in the residential property class.