Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 5, 2018 FILE NO.: WR 152897

Assessed Person(s): ACDA Limited Appellant(s): ACDA Limited Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 07 Respondent(s): City of Kawartha Lakes

Property Location(s): Concession 6 Lots 11 to 15 Concession 7 Lots 14 and 15

Municipality(ies): City of Kawartha Lakes

Roll Number(s): 1651-036-001-27500-0000 1651-036-001-32100-0000

Appeal Number(s): 3260425, 3292916, 3260241and 3292844 Taxation Year(s): 2017 and 2018 Hearing Event No.: 696579

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

Heard: April 20, 2018 by telephone conference call

APPEARANCES:

Parties	Counsel+/Representative
ACDA Limited	Dagmar Teubner
MPAC	Shawn O’Connor
City of Kawartha Lakes	No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

1Dagmar Teubner, representing ACDA Limited, appealed the 2017 assessments for these two abutting properties which together are known as Sulphur Springs Ranch. There is a total of 1,385 acres which are classified as farm land and conservation land and neither property is improved with structures.

2In addition to the 2017 taxation year appeal filed by the Appellant for each property, there is a 2018 taxation year appeal before the Assessment Review Board (“Board”). This is because, pursuant to s. 44.(26), a 2018 appeal is deemed to have been filed if the 2017 taxation year appeal was “not finally disposed of before March 31,” 2018.

3MPAC’s representative, Shawn O’Connor, takes the position that the assessments as returned are correct and equitable.

4Ms. Teubner’s position is that the market for the farm land on her properties is likely restricted to the Couchiching Conservancy, a non-government, non-profit land trust organization. She argues that the current value is limited to what Couchiching Conservancy would pay for the land. Ms. Teubner also argues that the assessment should be reduced because the larger of the two lots is landlocked and the soil class for both parcels is overstated. Ms. Teubner raised no objection to the value of the conservation land.

5For the reasons that follow, I find that:

a. For roll number 1651-036-001-27500-0000 (“27500”) the current value is $1,002,000 (rounded) as of January 1, 2016. This is the sum of $902,000 in the farm property class and $99,619, or $100,000 (rounded) in the conservation land class. There is no indication that it would be unfair or inequitable to assess the property at this value. I therefore confirm the assessment as returned for the 2017 and 2018 taxation years.

b. For roll number 1651-036-001-32100-0000 (“515 Wylie Road”) the current value is $399,233 as of January 1, 2016 in the farm property class. However, no one has filed a notice seeking a higher assessment. Therefore, I confirm the $388,000 assessment as returned of the subject property for the 2017 and 2018 taxation years in the farm property class.

PRELIMINARY MATTER

6In July 2017 the Board sent a letter to the parties outlining a schedule of events for disclosure of evidence. The parties were directed to exchange disclosure by November 28, 2017 and, if the matters were not settled, to disclose all documents and any written submissions on which they will rely at the hearing no later than February 6, 2018.

7On April 17, 2018 Ms. Teubner served additional documents on MPAC, the Municipality and the Board. These documents defined the term Alvar, provided a definition of the Carden Plain, and the location of the subject properties within the Carden Plain, as well as an Ontario Ministry of Agriculture, Food and Rural Affairs (“OMAFRA”) document describing and defining agricultural soil classes. Mr. O’Connor objected to the late disclosure of these documents. After hearing submissions from the parties, I found that they either repeated the evidence already submitted or clarified the evidence already submitted. I also found that I would have otherwise requested this information from the parties. I considered Rules 4, 5 and 45 of the Board’s Rules of Practice and Procedure and found that while the late disclosure contravened Rule 45, the contents of the submissions were not prejudicial to MPAC and that allowing the submissions was the most expeditious and least expensive route in resolving these matters.

CURRENT VALUE

8The two properties are used for cattle grazing by a tenant farmer. The provisions for valuing farm land are set out in s. 19(5) of the Assessment Act (“Act”) which includes “consideration shall be given to the current value of the lands and buildings for farm purposes only.” 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 properties would have sold for as farms and not for other uses on the valuation day, which, in this case is January 1, 2016 for the 2017 and 2018 taxation years.

9The first property, 27500, is comprised of 984 acres of land and is assessed at $1,002,000 in the Farm Tax Class with an exempt portion of Conservation Land. Mr. O’Connor submits that this value incudes a -20% adjustment to the Market Model. The assessed value before the -20% adjustment is broken down in Table 1.

Table 1

Number of Acres	Classification	Rate per Acre	Value	Soil Class
584	Farm Land, Full	$1,558.80	$910,341	5
287.73	Farm Land, Full with 14.21 acres in Farm Forestry Exemption (“FFE”) Applied	$843.50	$242,699	6
112.27	Conservation Land Exempt (Tax Incentive Program)	$887.32	$99,619	6

10The second parcel, 515 Wylie Road, is comprised of 401 acres wholly in the Farm Tax Class. For the 2017 and 2018 taxation years, 515 Wylie Road was assessed at $388,000. This value also includes a -20% adjustment to the Market Model. The assessed value before the -20% adjustment is broken down in Table 2.

11Mr. O’Connor testified that all farm properties with roll numbers beginning with either 1651-036 or 1651-039 have received a -20% market reduction based on recent sales data for improved farmlands in those areas. Although the subject properties are not improved with builidings, MPAC gave the subject properties this market adjustment.

Table 2

Number of Acres	Classification	Rate per Acre	Value	Soil Class
201	Farm Land, Full	$1,558.80	$313,319	5
200	Farm Land, Full with 5.79 acres in Farm Forestry Exemption (“FFE”) Applied	$861.63	$172,326	6

12The two properties abut, forming an upturned L-shape with the smaller lot, 515 Wylie Road, located on the northeast side. They are located north of Kirkfield Road and McNamee Road, south of Alvar Road and west of Wylie Road in the City of Kawartha Lakes. Only 515 Wylie Road is accessible from a road. Parcel 27500 is not accessible by roads, only through 515 Wylie Road or other abutting lands. There is a creek running through the properties. Neither property is improved with structures. The parties used the same evidence for both properties.

13MPAC assessed the parcels using the Cost Approach to value by estimating the current value of the land. Mr. O’Connor also presented three separate analyses to support the assessment as returned. The first was an assessment to time adjusted sale ratio (“ASR”) analysis of seven sales of farm lands without residences located between 6.5 and 20 kilometres from the subject property. Sales 1, 2, 4, 5 and 6 have no buildings. Sale 5 has a barn (built in 1900) and a shed (built in 1920). Sale 7 has six buildings: a silo, three barns and two sheds. Sales 1, 6 and 7 have the same -20% Market Model adjustment to their assessed values as the subject properties. All of the sales have farm land classes 2 to 6. The details of these properties are set out in Table 3.

Table 3

Roll Number	Number of Acres	Acres/Soil Classes	Sale Date	Sale Price	Time Adjusted Sale Price	Assessed Value and ASR
27500	984	Class 5: 584 Class 6: 400	N/A	N/A	N/A	N/A
515 Wylie Road	401	Class 5: 201 Class 6: 200	N/A	N/A	N/A	N/A
1 1651-036-001-26400	93.5	Class 5: 83.5 Class 6: 10	July 2013	100,000	122,440	108,000 0.88
2 1651-039-001-08200	150	Class 3: 20 Class 5: 110 Class 6: 20	October 2012	125,000	169,311	208,000 1.23
3 1651-340-020-20000	449	Class 3: 31 Class 4: 37 Class 5: 306 Class 6: 75	November 2016	649,000	590,895	721,000 1.22
4 1651-340-020-17400	147	Class 4: 90 Class 6: 57	January 2016	176,000	175,117	237,000 1.35
5 1651-160-010-10000	100	Class 3: 60 Class 6: 40	September 2016	300,000	277,950	275,000 0.99
6 1651-036-003-01600	37.8	Class 2: 37.8	June 2017	210,000	180,171	167,000 0.93
7 1651-036-003-00700	339.79	Class 2: 95.8 Class 3: 40 Class 6: 204	December 2015	450,000	452,280	451,000 1.00

14Mr. O’Connor argues that the median ASR of 1.00 for these seven sales indicates MPAC is assessing farm properties close to their market values. I disagree. An ASR analysis is a test of whether MPAC’s model is working well for a particular type of property by comparing the assessed values to open market sale values. The sale properties do not need to be identical but should be the same character and use. In this instance, I am concerned that properties that are improved with buildings are not similar enough to the subject properties which have no improvements. The buildings on Sale 5 are likely old enough to carry little value however Sale 7 is significantly different from the subject property due to the six structures. Accordingly, I am disregarding Sale 7. The ASRs for the remaining sales, from lowest to highest, are 0.88, 0.93, 0.99, 1.22, 1.23 and 1.35. For a sample of six or seven properties, the average rather than the median is preferred. The average ASR for the six remaining sales is 1.10 which indicates that MPAC is tending to assess farm properties above their market values.

15The second analysis contained six sales of farm lands located within 10 kilometres from the subject properties. All of the sales have the -20% Market Model adjustment to their assessed values. Mr. O’Connor presented the ASRs which I’ve arranged from lowest to highest: 0.73, 0.80, 0.88, 1.00, 1.00 and 1.11 with an average ASR of 0.92. This indicates that MPAC is tending to assess farm lands located near the subject properties below their market value. For the purpose of using the actual sale values to determine the subject property’s current value, I find that only one of the sales, Sale 1 which is also Sale 1 in Table 3, is sufficiently similar. MPAC’s evidence is that this 93.5 acre unimproved farm property has 83.5 acres of Class 5 farm lands and 10 acres eligible for the Farm Forest Exemption. The sale price per acre of Class 5 farm land is $1,465.87 (the time adjusted sale price of $122,440/83.5 acres). The remaining five sales are improved with residences and farm building. Sales 2, 3, 5 and 6 have residential buildings, Sales 2 and 6 have two additional out buildings (barns and a Quonset) and Sales 3, 4 and 5 are each improved with numerous barns and sheds. Neither party presented any evidence which extrapolates of the sale price per acre of farmland for any of the soil classes included in these five Sales. Therefore, I find that they are not directly comparable to the subject property to determine a sale price per acre value.

16Of the sales presented in MPAC’s first two analyses, the only other sale I can determine a valuation from is Sale 2 in Table 3. While it has a small amount of soil classes 3 and 6, the majority is soil class 5. Like the subject properties, it is an unimproved farm although it is much smaller than the subject properties. It has a time adjusted sale value of $1,128.74 per acre.

17Ms. Teubner argued that MPAC’s sale properties are superior to her properties because they are located on paved roads and have access to hydro. Mr. O’Connor does not disagree with this description but takes the position that they are comparable because, like the subject property, they are used as grazing land.

18The third analysis was a review of assessed rates per acre applied to abutting farm properties. Mr. O’Connor submitted this data to show that MPAC is assessing similar soil classes at similar values. This analysis carries little weight in determining current value because the assessments have not been tested with open market sales.

19Ms. Teubner argued that the only prospective purchaser for her property is the Couchiching Conservancy or the Nature Conservancy of Canada. While her evidence and arguments indicate that these organizations may be interested in acquiring the Sulphur Springs Ranch, the evidence does not lead me to conclude that they would be the only prospective purchasers or that they would not pay the open market value for the land.

Soil Class

20MPAC’s evidence is that OMAFRA classifies 515 Wylie Road’s soil composition as loam and 27500’s as mostly loam with some areas of ‘muck’. MPAC defines workable crop land as being a minimum of class 3 and a maximum of class 1. The subject properties are assessed as classes 5 and 6. Mr. O’Connor testified that he walked the properties in a pre-hearing inspection and he is satisfied that the properties contain both soil classes 5 and 6. The parties agree that the subject properties’ land is not tillable, that it is not suitable for crops.

21Ms. Teubner argued that both of her properties should be soil class 6 rather than a mix of soil classes 5 and 6. She presented OMAFRA’s soil classifications which range from 1 to 7 with 7 being the least capable for agriculture. The definitions for soil classes 5 and 6 are as follows:

Class 5 – Soils in this class have very severe limitations that restrict their capability to producing perennial forage crops, and improvement practices are feasible. The limitations are so severe that the soils are not capable of use for sustained production of annual field crops. The soils are capable of producing native or tame species of perennial forage plants and may be improved through the use of farm machinery. Feasible improvement practices may include clearing of brush, cultivation, seeding, fertilizing or water control.

Class 6 – Soils in this class are unsuited for cultivation, but are capable of use for unimproved permanent pasture. These soils may provide some sustained grazing for farm animals, but the limitations are so severe that improvement through the use of farm machinery is impractical. The terrain may be unsuitable for the use of farm machinery, or the soils may not respond to improvement, or the grazing season may be very short.

22Ms. Teubner’s evidence is that both parcels are located within the Carden Alvar Natural Area. Oxford English Dictionary defines alvar is an area of limestone with little or no soil or vegetation which often floods in the spring and is affected by drought in the summer.

23Ms. Teubner testified that Sulphur Springs Ranch was purchased by her father and she now has the stewardship of the property. She testified she actively farms 2,200 acres and has a designation of farmer from OMAFRA. She explained that she is committed to protecting the ecologically sensitive alvar. Her stewardship includes having worked in conjunction with the Couchiching Conservancy and the Nature Conservancy of Canada, attending workshops for owners of alvar properties and being a member of the Couchiching Advisory Council. Ms. Teubner presented her 2008 management agreement with Couchiching Conservancy which provides “a framework for the joint stewardship and management of the significant natural features of Sulphur Springs Ranch.” This document indicates that for 60 years the primary use of the property has been cattle ranching during the spring to fall seasons. She argues that the subject properties are being monitored to protect the ecology of the alvar. The parties agree that the Eastern Loggerhead Shrike is an endangered species whose preferred habitat is on an alvar. Ms. Teubner testified that the cattle keep the shrubs in check which is believed to promote nesting habitats for the Shrikes on the alvar.

24Ms. Teubner has a tenant farmer who takes his cattle onto the subject properties for grazing. She submitted a copy of her tenancy agreement with the farmer and testified that the rental rate of $300 per acre is modest because it is set by the Couchiching Conservancy and that tenant farmers would not be willing to pay more than the market rate. Ms. Teubner submitted a copy of the lease which she said was given to her by Couchiching Conservancy and specifies how the land is used. She argues that this is limited income and should be reflected in the assessment. Ms. Teubner did not specify how this rental rate should be reflected in market value nor did she present evidence of other farm’s incomes and sale values.

25Ms. Teubner presented a 2007 report by Jarmo Jalava, a Consulting Ecologist which was produced to assess the conservation importance of Sulphur Springs Ranch in terms of conservation easements or acquisition. Mr. Jalava described Sulphur Spring Ranch as having alvar, upland forest, treed swamp and thicket swamp areas. The alvar shrub land is mostly located in the southern arm (the bottom of the upturned L shape) of the Ranch. As a result of this report, the number of cattle grazing on the land was reduced to promote Shrike habitat preservation and reduce compaction of the soil because the cattle were overgrazing and trampling the area.

26The parties also agree that in 2012 the Ministry of Natural Resources changed the subject property’s classification of Conservation Land Exempt from 243 acres to 112.27 acres.

27Mr. O’Connor argued that while Ms. Teubner’s involvement with keeping land is commendable, the highest and best use for this farmland is seasonal pasture and raising foraged crops and that the rates per acre are consistent with the assessed soil class.

28The evidence presented does not lead me to conclude that the soil class allocation requires an adjustment. Based the evidence presented, in particular, OMAFRA’s soil classification definitions and the 2007 report by Mr. Jalava, I am satisfied that the subject property consists of both soil classes 5 and 6. I was presented with no evidence to contradict the soil classification of the subject properties. Ms. Teubner has made a decision on how to manage the land and it is an admirable choice but it is a choice, nonetheless. It does not affect the soil classification.

Access to Land

29Ms. Teubner argued that MPAC’s comparable properties are accessed by maintained and paved roads and have access to hydro. The access to the subject properties is via Wylie Road which is a single lane, minimally maintained road with only seasonal access. She further argued that 27500 is landlocked and, therefore, its value is limited unless the owner has access rights or owns an abutting parcel with road access. She argued that the inaccessibility of both parcels should be reflected in the assessed values.

30Mr. O’Connor’s position is that 27500 is accessible from either 515 Wylie or remotely from Kirkfield Road. He further argued that the rate per acre for farm land is based on use and not by access.

31The parties agree that, unlike the sales comparables, the subject property is located on a seasonal, unpaved road and does not have access to hydro. The parties also agree that 27500 is landlocked. I accept Ms. Teubner’s argument that these factors will negatively impact the market value of her properties. The sale evidence indicates that soil class 5 lands in the vicinity of the subject property have a market value of $1,128.74 and $1,465.87 per acre. Based on the negative aspects of the subject properties, I find it would be fair to apply the lower of these two values to the subject properties.

32Accordingly, I find the current value of 22750 is $1,002,000, rounded. This value is obtained from the amounts set out in Table 4.

Table 4

Number of Acres	Classification	Rate per Acre	Value
584	Farm Land, Full	$1,128.94	$659,301
287.73	Farm Land, Full with 14.21 acres in Farm Forestry Exemption (“FFE”) Applied	$843.50	$242,699
112.27	Conservation Land Exempt (Tax Incentive Program)	$887.32	$99,619

33I find the current value for 515 Wylie Road $399,000, rounded. This value is obtained from the amounts set out in Table 5.

Table 5

Number of Acres	Classification	Rate per Acre	Value
201	Farm Land, Full	$1,128.94	$226,907
200	Farm Land, Full with 5.79 acres in Farm Forestry Exemption (“FFE”) Applied	$861.63	$172,326

EQUITY

34Once 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.

35Mr. O’Connor presented an equity analysis of 25 sales of farm properties without buildings or structures, located within 24 kilometres of the subject properties. The median time adjusted assessment to sale ratio of these properties is 0.98 with a 17.18 coefficient of dispersion.

36Mr. O’Connor submits that an equitable reduction of the current value for the 2017 to 2018 taxation years is not required because the assessment to sale ratio of 0.98 falls well within MPAC’s acceptable range of 0.95 to 1.05 and the coefficient of dispersion of 17.18 acceptable because it should be not more than 20 for income producing and rural properties.

37Ms. Teubner presented no evidence or arguments regarding equity.

38Based on the evidence presented, I do not find that an adjustment for equity is required for these properties.

CONCLUSION

39I find that the current value for 27500, as of the January 1, 2016 valuation day, is $1,002,000, with $902,000 in the farm property class and $99,619, or $100,000 (rounded) in the conservation land class. I further find that the current value for 515 Wylie Road is $399,000 in the farm property class. However, as none of the parties filed a notice seeking a higher assessment, I am confirming the assessment as returned at $388,000.

40There is no evidence that it would be unfair or inequitable to assess the properties at these values.