Greven v. Municipal Property Assessment Corporation, 2018 CanLII 86693

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

September 14, 2018

FILE NO.:

WR 154802

Assessed Person(s):

Marcia Elizabeth Julian, Catherine Joy Greven, Robert Geoffrey Julian

Appellant(s):

Catherine Greven

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 17

Respondent(s):

Township of Lake of Bays

Property Location(s):

1301 Hutcheson Road

Municipality(ies):

Township of Lake of Bays

Roll Number(s):

4427-020-008-10900-0000

Appeal Number(s):

3267840 and 3308960

Taxation Year(s):

2017 and 2018

Hearing Event No.:

700672

Legislative Authority:

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

Heard:

July 20, 2018 via telephone conference call

APPEARANCES:

Parties

Representative

Marcia Elizabeth Julian Robert Geoffrey Julian Catherine Joy Greven

Marcia Julian

MPAC

Sue Hummel Justin Johnstone

Township of Lake of Bays

No one appeared

DECISION OF THE BOARD DELIVERED BY ANTHONY LaREGINA

INTRODUCTION

11301 Hutcheson Road (“subject property”) is a 96 acre parcel of land located on Rebecca Lake with an effective lake frontage of 2,510 feet. The subject property has a summer or seasonal access road bisecting the property and has seven cottages that are owned by the family and extended family of the property owners. The property is classified as Managed Forest, vacant land on water and therefore participates in the Managed Forest Incentive Program. For the 2017 and 2018 taxation years, the current value assessment was returned at $111,000 which includes a -50% adjustment for the low wet areas, the steep topography, and to recognize the negative factor of having a road bisect the property.

2Sue Hummel, the assessor from MPAC, provided the Assessment Review Board (“Board”) with six comparable property sales located in the vicinity of the subject property. Based on the range of sale values of the comparable properties, Ms. Hummel determined that the likely sale value of the subject property is $358,000. Applying the Managed Forest Valuation Criteria, as per Ontario Regulation 282/98 (the “Regulation”), Ms. Hummel determined the adjusted current value to be 31% of current value of $358,000 or $111,000. Ms. Hummel also presented an equity study with a 0.989 median Assessment to Sales Ratio (“ASR”), and suggested that the Board not make an equity adjustment. Based on Ms. Hummel’s evidence, Justin Johnstone, the representative for MPAC, is seeking a confirmation of the assessment as returned at $111,000.

3Marcia Julian, the Appellant, is requesting a reduction in the returned assessment from $111,000 to $17,324 which reflects the bottom of the range of values for Managed Forest Lands in the area, or $180.46 per acre applied to the 96 acre parcel.

4In addition to the 2017 taxation year appeal filed by Catherine Greven, there is a 2018 taxation year appeal before me. This is because, pursuant to subsection 44.(26) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”), a 2018 appeal is deemed to have been filed if the 2017 taxation year appeal was “not finally disposed of before March 31, 2018.

ISSUES

5The issues to be determined are:

i.) What is the correct current value of the subject property for the 2017 and 2018 taxation years?

ii.) Is the current value as determined by the Board equitable with the assessments of similar lands in the vicinity?

DECISION

6The Board finds the current value of the subject property for the 2017 and 2018 taxation years to be $111,000.

7The Board also finds that the current value is equitable with the assessments of similar lands in the vicinity and requires no further equity adjustment.

8The Board confirms the assessment of the subject property of $111,000 for the 2017 and 2018 taxation years.

REASONS FOR DECISION

Current Value – Evidence and Analysis

9In accordance with s. 44.(3)(a) of the Act, the first mandate of the Board is to determine “the current value of the land.” The property is Managed Forest Lands. The following legislation applies to the valuation of this property class for 2017 and subsequent years.

10Section 19.(5.2) provides:

Conservation lands, managed forest. – The current value of land that is conservation land as defined in the regulations or land in the managed forests property class shall be based only on the current use of the land and not other uses to which the land could be put.

11Section 19.(5.2.1) provides:

Current Value of Managed Forests. – Despite subsection (5.2) and any other provision of this Act, the Minister may, by regulation, provide that the current value of land in the managed forests property class shall be determined in accordance with the regulations.

12Section 32.1(1) of the Regulation states:

32.1 (1) The current value of land in the managed forests property class shall be determined as follows for the 2017 and subsequent taxation years:

1. Determine the value of the land in accordance with subsection 19 (5.2) of the Act.

2. Determine the value of the land in accordance with subsection (2).

3. If the value determined under paragraph 1 is less than the value determined under paragraph 2, the current value of the land is the value determined under paragraph 1.

4. If the value determined under paragraph 2 is less than 31 per cent of the value determined under paragraph 1, the current value of the land is the amount calculated by multiplying the value determined under paragraph 1 by 0.31.

5. In any other case, the current value of the land is the value determined under paragraph 2.

32.1(2) For the purposes of paragraph 2 of subsection (1), the value of the land is determined as follows:

1. Determine whether the geographic area in which the land is located is listed in Column 2 of Table 1 to Part IX.1 of this Regulation. If it is, take the step described in paragraph 2. If it is not, take the steps described in paragraphs 4 and 5.

2. If the geographic area is listed in Column 2 of Table 1, determine whether the land band for the land, as assigned by the assessment corporation, is listed in Column 3 of Table 1 for the applicable geographic area. If it is, take the steps described in paragraphs 3 and 5. If it is not, take the steps described in paragraphs 4 and 5.

3. For land located in a geographic area listed in Column 2 of Table 1 and assigned to a land band listed in Column 3 of Table 1, identify the applicable value per acre of the land as set out in Column 4 of Table 1.

4. For any other land, identify the applicable value per acre of the land as set out in Column 2 of Table 2 to Part IX.1 of this Regulation using the land band assigned to the land by the assessment corporation.

5. The value of the land is calculated by multiplying the applicable value per acre of the land by the acreage. O. Reg. 656/05, s. 1; O. Reg. 101/09, s. 1.

13The Regulation requires that two values be determined in order to determine the current value Managed Forest property. First, the Board must decide what the property likely would have sold for based on its current use, which I will call the “sale value”. Secondly, the Board must determine the regulated value, in accordance with subsection 32.1(2). Here the specified rate per acre is $529 for this geographic area, which results in a regulated value of $50,784. The Regulation then states that, if the sale value is less than the regulated value, the current value is the sale value. If the regulated value is less than 31% of the sale value then the current value is 31% of the sale value. Finally, if neither of those situations applies then the current value is the regulated value.

MPAC’s Position

14In support of current value, Ms. Hummel presented six comparable property sales located in the vicinity of the subject property. The data representing the six properties is displayed below:

Subject

Sale 1

Sale 2

Sale 3

Sale 4

Sale 5

Sale 6

1301 Hutcheson Road

1177 Fieldale Road Unit 2

1171 Mansell Road

Kell’s Bay Road

Inawendawin Road

Red Chalk Lake Road

1101 Gilleach Lake Road Unit 3

Property Code description

Managed Forest, vacant land on water

Vacant residential/ recreational land on water

Vacant residential/ recreational land on water

Vacant residential/ recreational land on water

Vacant residential/ recreational land on water

Vacant residential/ recreational land on water

Vacant residential/ recreational Land on water

KM’s from Subj.

Less than 3.5

Less than 3.5

Less than 3.5

24

26

31

Current Value Assessment (“CVA”) $

358,000

402,000

249,000

201,000

301,000

230,000

339,000

Sale Amount $

385,000

285,000

235,000

300,000

260,000

326,500

Sale Date

01/2013

06/2016

03/2014

05/2014

06/2015

02/2013

Site Area acres

96

2.07

3.06

1.85

1.63

44.34

108

Actual Frontage Ft.

2640

421

310

240

1020

920

2680

Effect Frontage Ft.

2510

414

310

232

560

825

2155

Access

Summer or seasonal access

Right of way access

Summer or seasonal access

Summer of seasonal access

Summer or seasonal access

Summer or seasonal access

Private Road access

Waterfront variables

Waterfront East exposure

Waterfront South exposure

Waterfront North Exposure

Waterfront North exposure

Waterfront East Exposure

Waterfront South Exposure

Waterfront South Exposure

15Ms. Hummel argued that the sale value range of the six comparable properties between $235,000 and $385,000 supports a sale value of $358,000 for the subject property. Ms. Hummel further submits that the large acreage of the subject property combined with the 2,510 feet of waterfront access justifies being at the upper end of the sale value range indicative of properties with larger lots and larger lakefront access.

16Ms. Hummel acknowledged that she could not find property sales classified as Managed Forest but was very certain that the subject property’s sales value of $358,000 is accurate and reflective of comparable property sales presented that are in the residential/recreational class.

17Ms. Hummel requests that the Board find the sale value of the subject property to be $358,000 based on s. 19(5.2) of the Act.

18In order to determine the current value of the subject property Ms. Hummel followed s. 32.1(1) of the Regulation and determined the following: the sale value of the subject based on use in accordance with s. 19(5.2) is $358,000 and the regulated value, based on the $529 per acre for Land Band 606 listed in the Regulation, is $50,000 for the 96 acre property. The regulated value of $50,000 is less than 31% of the $358,000 sale value established under s. 19(5.2). Paragraph 4 of s. 32.1(1) states that when the regulated value is less than 31% of the sale value the current value is the sale value multiplied by 0.31, or $110,980, which MPAC rounded to $111,000.

19Mr. Johnstone summarized the case arguing that, based on the use of the property under s. 19.(5.2) of the Act and following the criteria for establishing the current value for Managed Forest Lands set out in s. 32.1 of the Regulation, the Board should find that the current value of the subject property to be 31% of sale value of $358,000, or $111,000.

Appellant’s Position

20Ms. Julian, representing the Appellants, provided the following disclosure details relating to the history and valuation of the subject property:

• The property was purchased by her great grandmother Jennie Hutcheson, in 1904 and has remained in the family since that time.

• A private road was built in 1947 through the property to provide road access to the family cottages, which are now seven cottages owned by extended family, which aside from forest management, is the primary use of the property.

• In 2001, her father, W. Geoffrey Julian, initiated the Stewardship Plan under the Act and the Ontario Managed Forest Tax Incentive Program covering a 20 year period from 2001 to 2020. This program was renewed in 2014 and is now valid until 2033.

• In 2001, the subject property’s assessment was returned at $235,000 and was appealed to this Board. A panel of the Board decided in Julian v. Ontario Property Assessment Corp., Region No. 17, [2001] O.A.R.B.D. No. 15, that the assessment of land should be based on current use which was Managed Forest and therefore the value should be based on the regulated value at the time of $75 per acre for a total of $7,000.

• In 2015, the subject property’s assessment was appealed for a second time in response to MPAC’s increased assessment on the property to $233,000. Once again the Board’s decision in Greven v. Municipal Property Assessment Corp. Region 17, [2015] O.A.R.B.D. No. 257 was in favour of s. 19.(5.2) of the Act stating that the current value of the property should be based on its current use which was found to be Managed Forest Lands. Based on the regulated rate for 2015 of $283 per acre the property assessment was reduced to the regulated value of $27,000.

21Ms. Julian submits in her written submission that nothing materially has changed with the circumstances relating to the subject property since the 2001 and 2015 Board’s decisions and therefore the assessment of $27,000 from the 2015 decision should remain as outlined in the regulations and the Act.

22In oral submissions, Ms. Julian argued that the Managed Forest Lands in the vicinity are assessed based on a range of regulated rates between $180.46 and $1,600 per acre and that the family is requesting that the subject property be valued based on the lower value of $180.46 per acre resulting in an assessment of $17,324.

Boards Analysis of Current Value

23Ms. Julian takes the position that the subject property is classified as Managed Forest Lands and that the comparison to residential/recreational lands on water, as argued by MPAC, are not valid in establishing the sale value of the subject property. Ms. Julian further submits that they have not purchased the road shore allowance for the property and therefore questions whether the property can actually be considered as waterfront. In cross examination Ms. Julian admitted that they enjoy unrestricted access to the water front even though they have not purchased the road shore allowance.

24Section 19.(5.2) of the Act is very clear that the current value of land in the Managed Forest Property Class shall be based only on the current use of the land. While the land is classified as Managed Forest, and the Appellants submit that their intention is to preserve both the forest and wildlife species, the fact remains that the land has seven cottages owned by extended family with an access road to the cottages and unrestricted access to the lake. This is evidence of residential/recreational use by the extended family of the assessed persons.

25Based on the Board’s conclusion that the subject property is being used as residential/recreational lands on water, the Board accepts the six comparable properties submitted by MPAC in support of the determination of the sale value as they are also used for residential/recreational lands on water even though these properties have no cottage structures as the subject property.

26Ms. Julian introduced no sales comparison in support of current value.

27Ms. Hummel introduced the sale of six comparable properties in support of current value. Three were located directly on Rebecca Lake, the same as the subject property, while the other three were located on Paint Lake, Shoe Lake, and Gilleach Lake all in the vicinity of the subject property. The sales all took place between January 2013 and June 2016. The sale value range of the six comparable sales is between $235,000 and $385,000. The midpoint of the range is $310,000 the mean value of the range is $298,000. The subject property acreage, frontage on the lake, and access road are similar to 1101 Gilleach Lake Road which sold for $326,500. Based on the grounds that the subject property has seven cottages while 1101 Gilleach Lake Road is vacant land, the Board finds that the current value of the subject property at $358,000 is reasonable. Furthermore based on the characteristics of the property this value appropriately falls on the higher end of the sale range for all six comparable properties.

28The Board therefore finds that the sale value of the subject property is $358,000.

29The Board is in agreement with MPAC that the subject lands are classified as Managed Forest Lands and therefore current value is determined in accordance with s. 32.1(1) of the Regulation. The regulated value of the subject property is $50,784, which is only 14% of the sale value. That is less than 31% of the sale value, and paragraph 32.1(1)(4) of the Regulation states that, in those circumstances, the current value is 0.31 multiplied by the sale value. Ms. Hummel correctly calculated that amount to be $111,000.

30Ms. Julian provided two decisions in support of her request to value the subject property based on the regulated value for Managed Forest Land. In both the 2001 decision of Julian v. Ontario Property Assessment Corp., Region No. 17, [2001] O.A.R.B.D. No. 15 and the 2015 decision of Greven v. Municipal Property Assessment Corp. Region 17, [2015] O.A.R.B.D. No. 257, the panels decided that under s. 19.(5.2) of the Act, the current value should be based only on the use of the land and both panels made a finding that the land was solely used as Managed Forest. The evidence in this case clearly establishes that there are seven cottages on the property owned by the extended family and an access road built for the purpose of accessing the cottages. It is my conclusion based on the evidence presented that the subject property is used as a residential/recreational seasonal use property classified as Managed Forest Land and therefore benefits in being assessed at 31% of the market value. In my opinion, two previous panels failed to distinguish between classification and use. Section 19.(5.2) states that “the current value of… land in the managed forests property class shall be based only on the current use of the land” not its classification. Managed Forest Land can be used in ways other than managed forest. If that were not the case, there would be no way to determine the sale value, as required by the Regulation.

31The Board finds that the current value of the subject property based the calculation of current value for land in the Managed Forest Classification under Ontario Regulation 32.1(1) is $111,000.

Board’s Analysis of Equity

32Section 44.(3)(b) directs that, after determining current value, the Board shall 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.”

33The ASR of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed below its current value. If any other property is assessed below its current value, a reduction in the assessment below current value is required to make the assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by dividing the assessment as returned by the time adjusted sale price.

34Ms. Hummel presented an equity analysis of 30 sales of property code 110 which includes Vacant Residential/Recreational land on water, Property Code 241: Managed Forest Property, vacant land on water that occurred from January 1, 2013 to December 31, 2016, all located within 18.3 kilometre of the subject property, resulting in a median ASR of 0.989. Mr. Johnstone submits that MPAC standards indicate that for residential property, the median ASR should fall between 0.95 and 1.05. If the median ratio falls within this range, this reveals that the CVAs are reflective of sales prices in the vicinity and therefore no further adjustment is required. In this case the median ASR falls inside of the range at 0.989 therefore, Mr. Johnstone recommends no adjustment to the current value.

35Ms. Julian provides no evidence in support of an equity argument.

36The best evidence in relation to equity is the sale and assessment evidence of 30 properties presented by MPAC indicating a median ASR of 0.989. Based on MPAC’s equity study, the Board finds that no further adjustment to the current value of the subject property at $111,000 is required in order to ensure it is equitable with the assessment of other property in the vicinity.

CONCLUSION

37Based on the best available evidence the Board confirms the assessment of the subject property of $111,000 for the 2017 and 2018 taxation year.