Zimany v. Municipal Property Assessment Corp., 2018 CanLII 84492

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 07, 2018

FILE NO.: WR 153346

Assessed Person(s): Maria Zimany

Appellant(s): Maria Zimany and John Zimany

Respondent(s): Municipal Property Assessment Corp. (“MPAC”), Region No. 30

Respondent(s): City of Sudbury

Property Location(s): 2897 Treeview Road

Municipality: City of Greater Sudbury

Roll Number(s): 5307-090-018-08307-0000

Appeal Number(s): 3251360 and 3314616

Taxation Year(s): 2017 and 2018

Hearing Event No.: 696877

Heard: April 24, 2018 in Sudbury, Ontario

APPEARANCES:

Parties	Representative
Maria Gigliotti-Zimany	Luciano Ingriselli
John Zimany	Luciano Ingriselli
MPAC	Andrew Rossanese
City of Sudbury	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

REASONS

BACKGROUND

1Maria Gigliotti-Zimany and her spouse, John Zimany (“Appellants”), are the owners of the subject property, a single family detached home at 2897 Treeview Road in Greater Sudbury with 147 feet on Middle Lake. The home enjoys hydro service but makes use of a septic field rather than sewer connections. The home itself is very small by any standards: it is 375 square feet (“sq. ft.”) in size, with two attached garages measuring 702 sq. ft. and another outbuilding measuring 116 sq. ft. Despite the size of the garages, the property is classified as single-family detached on water – residential.

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, the Municipal Property Assessment Corporation (“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 $333,000 for the 2017 taxation year, and at $247,000 for the 2018 taxation year.

4The Appellants have filed appeals for taxation years 2017 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is their position that MPAC’s assessment of current value is too high and that the correct current value is between $172,000 and $214,000. At this hearing, MPAC takes the position that its assessed value, reduced to $247,000, is correct.

5Pursuant to s. 40(11) of the Act the City of Sudbury is a party to this proceeding. However, the City did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the City’s 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 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 Appellants 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 for the 2017 and 2018 taxation years is $220,000.

RELEVANT LEGISLATION

9Section 1 of the Act states:

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.

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 19.2(1) of the Act states:

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:

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

12Section 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.

13Section 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.

Issue

14The issue to be determined on this appeal is the correct current value of the subject property for the taxation years 2017 and 2018.

MPAC’S EVIDENCE

15Andrew Rossanese represented MPAC, and also testified on its behalf. Mr. Rossanese authored the documents filed in support of the assessment, including the Valuation Report and the Equity Analysis Report.

16Mr. Rossanese described the subject property as a waterfront property comprised of a small living area of 375 sq. ft. and two garage spaces with ceramic tile floors. The entire building is heated by in-floor radiant hot water heating. The home is located on a lot with an area of 46,609 sq. ft. or 1.07 acres. It has 147 feet of effective frontage on Middle Lake.

17MPAC chooses the direct sales comparison method of assessing residential property, and Mr. Rossanese provided a selection of similar properties sold in proximity to the valuation day, January 1, 2016.

18Mr. Rossanese explained that he looked at older cottages on some local lakes and also at vacant waterfront land sales to which he added the price of the home. He chose eight properties, none of which were on Middle Lake, and all of which were ranked “inferior” to the subject property. The structures on some of these properties ranged in age significantly, having been built between 1940 and 2014 (the subject property). The quality ratings of the structures were also variable, including a cottage built in 1940 on 4547 Long Lake Road and deemed to be a construction quality rating 3 (as compared to the subject property’s quality 5 rating.). The comparable properties were all on superior bodies of water. Mr. Rossanese calculated the average selling price of the eight comparable properties, and found that the average value was $345,666. The subject property, assessed at $247,000, was assessed at a lower value than the average selling price of the comparable properties. The properties at the lower end of the scale among the eight comparable properties had fewer amenities such as no central heat.

19Upon questioning by the Appellants, Mr. Rossanese confirmed that Middle Lake is not as nice a lake as St. Charles Lake and Long Lake were, but that he needed to search a variety of the local lakes to find properties eminently comparable with the subject property. Mr. Rossanese explained that he did not use any of the Middle Lake homes as comparators because they were more valuable than the subject property and therefore unsuitable. The unique quality of the subject property, with a living space approximately half the size of the garage area, is unusual. However, Mr. Rossanese also testified that the two attached garages, 702 sq.ft. in total, were finished with ceramic tile floors and in-floor radiant heating and therefore quite unusual when compared to other garages. This made it more difficult to assess the property.

MPAC’S SUBMISSIONS

20Based on the eight comparable direct sales of properties in the vicinity, Mr. Rossanese concluded that the subject property was of a lower value than most of the comparable properties due to its small size. However, it was waterfront property of over an acre in size, and was useful to family members for recreational purposes. As such, he determined that the value would be $247,000. When he carried out his own equity analysis study, he confirmed that the level of appraisal was acceptable, and that no reduction in value was required on the ground of equity.

APPELLANTS’ EVIDENCE

21Kirha Zimany, the daughter of the Appellants, gave evidence on behalf of her parents. She began by pointing out the properties in the neighbourhood that had experienced a decrease in value between 2015 and 2016. Some of the features that Ms. Zimany thought had been overlooked in the assessment of the subject property included the fact that the lakefront is not as nice as other lakes in the area, and that the lake is weedy.

22Luciano Ingreselli, a family friend, also testified for the Appellants. He provided some documents that included photographic evidence of neighbouring properties, photographs of the subject property showing the interior and the exterior; photographs and other information on the following comparable residential sales in the area:

(a) 1023 Delwood Court (Robinson Lake)

(b) 301 Middle Lake Road (Middle Lake)

(c) 2234 Hulda Street (Still Lake)

23Mr. Ingreselli described some of the interior finishes of the subject property and indicated that the use of ceramic tile on the garage floors, for example, would allow the building to be turned into more living area and less garage area in the future if the Zimany family wished.

24The Zimany family also entered a series of photographs of the subject property that were useful in determining the relationship between the residential portion of the structure and the two garages. The photographs depicted the lot, the proximity of the Trans-Canada highway, the swampland surrounding both the subject property and the neighbouring property at 2903 Treeview Road, and the interior of the living area of the home and the garage areas.

Appellants’ Submissions

25Ms. Zimany concluded the Appellants’ presentation by arguing that the property assessment is too high and fails to give sufficient weight to the negative characteristics, including: its proximity to the Trans-Canada highway; the swampy terrain around this end of Middle Lake; the shallow and weedy quality of the lake itself, and the very small living area of the subject property’s dwelling. Ms. Zimany submits that the correct assessment for the subject property would be somewhere in the range of $172,000 to $214,000, but submits that the correct value would be closer to $194,750 as of the valuation day, January 1, 2016.

ANALYSIS AND FINDINGS

26The fact that the subject property is such an unusual design makes it difficult to compare to other lakefront properties in the area which may have more traditional dwellings such as cottages or homes. Finding comparable properties in the area is difficult, and generally the comparable properties produced by both MPAC and the Appellants were either quite old and unsatisfactory from that perspective, or were in better locations with better amenities. None of the suggested comparable property sales were actually similar to the subject property, other than being located on waterfront.

27An important consideration in determining the value of property is to consider its utility. This factor, in conjunction with factors such as location, construction quality, age, and year-round occupancy, will assist in the determination of value. In this case, the living space of the subject property is very small. Photographs provided by the Appellants show a very small kitchen with a washroom off it, and an open area described as the “Living/Sleeping/Eating Room”, with a bed, a small table, and a couch or chair. The area of the living space is 375 sq. ft., while the two attached garages are 702 sq. ft. – almost twice the area. Clearly, the dimensions of this structure are unique and functionally different from a typical cottage or recreational lakefront property. The large garage space may have many uses on a year-round basis, given the presence of in-floor heating. The future uses of the space by the owners was not elaborated upon, except to say that the garage spaces could be used as living areas in the future. However, as things appeared in the photographs and in the testimony of Ms. Zimany and Mr. Ingreselli, the use as of the valuation day was as a recreational home for members of the family. At that point in time, it appears as though the garages were not being used as a regular part of the dwelling (except perhaps for storage). The Board accepts the fact that there are different uses to be made of the different sections of this building, and the assessment should reflect this.

28Each party has provided some comparable properties, with sufficient descriptions that they can indeed be compared. The Board finds that there are six properties between MPAC’s selection and the Appellants’ selection that are useful in determining the value of the living area in the subject property. The sizes of the buildings are provided, along with the time-adjusted sales values (which were not contested by the Appellants, and will therefore be used). The following chart sets out the properties, the date of the sale, the sale price (with time adjustment – or “TA”), the number of sq. ft., and the price per sq. ft. Properties selected by the Appellants are marked with an asterisk. The properties selected are widely variable; however, the subject property, while possessing a very small living area, was also constructed with quality finishes and is reasonably new, having been built in 2014. Using a variety of values to come up with an average price per square foot serves to capture the small size but the good quality of the structure.

COMPARISON OF VALUES PER SQUARE FOOT OF COMPARABLE PROPERTIES

Address	Sale Date	Sale Amt. (TA)	Building Area	Value per s.f.
5307-090-016-00700	7 Nov 2014	$467,667	433 sq. ft.	$1,080
2560 South Shore	23 Sep 2-15	$345,117	693 sq. ft.	$498
4547 Long Lake	4 Sep 2014	$225,352	564 sq. ft.	$400
*1023 Delwood Court	27 Oct 2016	$322,500	1,121 sq. ft.	$288
*2234 Hulda Street	Jan 2017	$275,000	1,674 sq. ft.	$164
*301 Middle Lake Road	Jun 2013	$365,000	1,288 sq. ft.	$283

29The average value per square foot derived from the six property sales is $452. When I multiply that by the living area of 375 sq. ft., the total is $169,500.

30Because the garage area of this property is not living area per se at the time of the valuation day, it should be assessed differently. In the document package provided by Mr. Rossanese as part of his evidence is a document entitled ‘Market Valuation Report – Residential Properties – Market Area: Greater City of Sudbury, Validation Date: January 1, 2016’, we can ascertain the value range for both ordinary attached garages (page 15) and for Detached Garages with Residential Unit Above (page 16). While the subject property has two attached garages, it bears most similarity with garages with separate living quarters above. In the first case, a garage is valued between $8.73 to $72.84 per square foot (“sq. ft.”). In the second case, a garage with living quarters attached is valued between $19.50 to $72.85 per sq. ft.

31Because the subject property has a garage which has special characteristics, including in-floor radiant heating and ceramic tiles, it would be valued at the higher end of the selection. The garages occupy 702 sq. ft. of area. If they were valued close to the high end of available values, a value of $72 per sq. ft. may be reasonable. That would give the portion of the property taken up with the garages a value of $50,544.

[32] By adding the value of the garages to the value of the living quarters, the value of the entire property would be $169,500 + 50,544 = $220,044. This applies to the valuation day of January 1, 2016. If the Appellants changed the use of the garage area to straight residential uses, then this method of assessing the space would not apply.

DECISION

33The Board therefore reduces the value of the subject property as of January 1, 2016, for the taxation years 2017 from $333,000 to $220,000 and for the 2018 taxation year from $247,000 to $220,000.

34The Appellants did not lead evidence in respect of equity. The value does not need to be reduced on the ground of equity.