Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 12, 2018 FILE NO.: WR 154945

Assessed Person(s): Huibert deJong, Brenda Lee deJong Appellant(s): Huibert deJong, Brenda Lee deJong Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 26 Respondent(s): Municipality of Chatham-Kent

Property Location(s): 993 Nelson Street Municipality(ies): Municipality of Chatham-Kent Roll Number(s): 3650-410-010-18401-0000 Appeal Number(s): 3270960 and 3313450 Taxation Year(s): 2017 and 2018 sHearing Event No.: 701572

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

Heard: August 2, 2018 in Chatham, Ontario

APPEARANCES:

Parties	Representative
Huibert deJong, Brenda Lee deJong	Self-represented
MPAC	Justin Johnson
Municipality of Chatham-Kent	No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

INTRODUCTION

1Huibert deJong and Brenda Lee deJong are the owners of 993 Nelson Street (“the subject property”) in the Municipality of Chatham-Kent. They have appealed the assessment of their property for the 2017 and 2018 taxation years. Mr. deJong argues that his assessment is too high in relation to the economic conditions and housing market in his area and that his property’s value should not exceed $320,000.

2MPAC’s representative, Justin Johnson, argued that the assessment as returned at $382,000 is correct and equitable.

LEGISLATION

3Section 44.(3)(a) of the Assessment Act, R.S.O. 1990, c. A.31 (“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.

4Once 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.

5During the hearing it became apparent that Mr. deJong disclosed certain evidence to MPAC but not to the Board. I allowed both parties to submit Mr. deJong’s disclosed evidence to me by August 10, 2018 by post hearing submissions.

CURRENT VALUE

6The subject property is located in Chatham Township within the municipality of Chatham-Kent and is just outside the town of Wallaceburg. It is an irregular shaped lot with an effective frontage of 211 feet and an effective depth of 150 feet with a total effective area of 0.73 acre. It is located across the street from the Sydenham River which MPAC qualifies as ‘indirect waterfront – no waterfront ownership.’ The photographic evidence shows that there is an unobstructed view of the river from the subject property. The deJong’s property is improved with a one-storey, single family detached residence, built in 2015 with 2,035 square feet (“sq. ft.”) of building area and an attached garage measuring 524 sq. ft. and a small shed. There is no basement. The house is serviced by a septic bed system.

7The 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 the next best evidence.

MPAC’s Evidence

8Mr. Johnson describes the area in which the subject property is located as having ‘mostly single family homes which vary in age, size and quality of construction.’ He presented five sales which are outlined in Table 1 below. All of the sales are similar to the subject property in that they have indirect river waterfront but no waterfront ownership. He time-adjusted the sales to the January 1, 2016 valuation day and argued that the subject property is correctly assessed because the assessed value falls within this range of superior and inferior sales.

Table 1

	Address	House Size (sq. ft.)	Basement/Finished Area (sq. ft.)	Year Built	Quality of Construction	Lot Size Frontage acres	Sale Date	Sale Price	TASP
	Subject Property	2,035	0/0	2015	6.5	211 ft./ 0.73 acres	N/A	N/A	N/A
1	7792 McGregor Street	2,520	1,550/0	1992	7.5	428 ft./ 1.0 acres	May 2015	457,000	462,691
2	7417 North River Line	2,043	0/0	1950/ 1971*	6	90 ft./ 0.96 acre	July 2013	248,000	260,610
3	7465 North River Line	1,682	1,682/1,429	1950/ 1983*	6	64 ft./ 0.47 acres	October 2016	285,000	280,627
4	870 Wallace Street	1,267	1,246/1,022	1979	6	66 ft./ 0.18 acres	August 2016	157,000	155,092
5	878 Wallace Street	1,060	539/400	1987	6	66 ft./ 0.17 acres	August 2016	142,000	140,274

*The year built differs from the effective year built due to renovations/improvements.

9Sale 1, 7792 McGregor Line, has an older building that has two storeys. However the lot, the lot frontage, and the building area are larger and it has a higher quality of construction and an additional garage. I find that it is superior to the subject property and the subject property would sell for less than $462,691.

10I find that Sale 2, 7417 North River Line, is, on balance, inferior to the subject property. Like the subject property, it does not have a basement and has only one storey. However, it has a slightly lower quality of construction and is older than the subject property. The total lot area is larger but it has a smaller frontage. The subject property would sell for more than $260,610.

11I find that Sale 3, 7465 North River Line, is, on balance, inferior to the subject property. While it has an uninsulated barn and a basement area that is mostly finished, it has a smaller lot and building area, it is older, has a lower quality of construction and no garage. The subject property would sell for more than $280,627.

12I find that Sale 4, 870 Wallace Street is, on balance, inferior to the subject property. It has a basement which is mostly finished however it has a much smaller lot and main floor building area, no garage or other secondary building, and has a slightly lower quality of construction. The subject property would sell for more than $155,092.

13I find that Sale 5, 878 Wallace Street, is also inferior to the subject property. It has a partial basement which is mostly finished however it has a much smaller lot and main floor building area, it is older, has a slightly lower quality of construction and a smaller attached garage. The subject property would sell for more than $140,274.

Appellant’s Evidence

14Mr. deJong argued that his property should not be valued more than $320,000 which is the approximate cost to buy the land and build the structures. He argued that there is less of a market for higher-priced homes because:

a. The Wallaceburg area has had a decrease in population over the last few decades.

b. A number of large companies have left the area so there is little employment opportunity beyond minimum wage service sector jobs and youth do not return to the area after finishing their education.

c. The area attracts retirees and people who rely on social services.

d. The loss of the above leads to loss of services.

e. There have been no new housing developments in Wallaceburg in many years and few individual new homes built which indicates the lack of need for additional housing in the area.

f. There are numerous undeveloped lots along the area’s rivers.

15Mr. deJong argued that there is an abundance of homes with basements that are valued at $100,000 less than his assessment and therefore there is no market for his property at the assessed value of $382,000. The subject property was purpose built without stairs and without a basement or second floor. In support of this argument, he presented 13 sales of properties that have direct or indirect water/river fronts. I have disregarded two of the sales, 373 Wallace Street and 112 Margaret Avenue. Both are duplexes and, therefore, not directly comparable to the subject property. One of the sales, 878 Wallace Street, was also submitted by MPAC and is set out in Table 1, above. A summary of the remaining ten sales are set out in Table 2.

Table 2

	Address	House Size (sq. ft.)	Basement/Finished Area (sq. ft.)	Year Built	Quality of Construction	Lot Size Frontage acres	Sale Date	Sale Price	TASP
	Subject Property	2,035	0/0	2015	6.5	211 ft./ 0.73 acres	N/A	N/A	N/A
1	586 Sandra Crescent	1,971	841/658	1972	6.5	75 ft./ 0.29 acres	October 2017	275,000	N/A
2	1015 James Street	3,745	1,166/0	1920	6	75 ft./ 0.17 acres	November 2017	180,000	N/A
3	40 Bank Street	2,857	0/0	1993	6	130 ft./ 1.17 acres	September 2017	300,000	N/A
4	59 Water Street	1,752	675/0	1910	6	54 ft./ 0.12 acres	January 2016	162,500	162,500
5	122 Margaret Avenue	1,126	1,100/950	1923	6	59 ft./ 0.14 acres	May 2016	175,000	173,775
6	126 Margaret Avenue	1,694	0/0	1932	6	59 ft./ 0.14 acres	August 2016	195,000	192,660
7	562 Sandra Crescent	2,332	1,075/0	1973	6.5	110 ft./ 0.35 acres	December 2015	280,000	280,280
8	925 James Street	2,281	0/0	1995	6.5	73 ft./ 0.2 acres	May 2016	310,000	307,830
9	130 Margaret Avenue	2,018	733/0	1920	6	66 ft./ 0.15 acres	June 2014	174,000	179,394
10	1065 Nelson Street	1,196	1,196/0	1971	6	120 ft./ 0.55 acres	August 2015	205,000	206,435

*The year built differs from the effective year built due to renovations/improvements.

16Sales 1, 2, 4, 5, 6 and 10 are inferior to the subject property in age and lot size. Therefore, the subject property would sell for more than these sales which range from $162,000 to $275,000.

17Sale 3, 40 Bank Street, has a larger building and lot size than the subject property and it has no basement. However the frontage is smaller, it is 22 years older, and has a lower quality of construction. On balance, I find this property to be inferior to the subject property and that the subject property would sell for more than $300,000.

18Sale 7, 562 Sandra Crescent, has a slightly larger building than the subject property. It has a smaller lot and is older, but it has the same quality of construction. On balance, I find this property to be inferior to the subject property and that the subject property would likely sell for more than $280,280.

19Sale 8, 925 James Street, is similar to the subject property in that it has no basement. However, the building is slightly larger but it is older and the lot is smaller. Based on the age of the building and smaller lot, I find that this property is inferior to the subject property and that the subject property would sell for more than $307,830.

What is the Current Value?

20Of the sale properties submitted by the parties, I found that none are similar to the subject property. As a result, I have used a technique called “bracketing” whereby the subject property is compared to superior, similar and inferior properties that have sold in the open market and the value placed on the subject property within the range of sales is reasonable on a balance of probabilities. This technique was also employed by the parties. Based on the sales evidence provided, I find that the subject property would sell for more than $307,830 (the highest value of the inferior properties) but less than $462,691 (the only superior property).

21Mr. Johnson argues that, based on his sales evidence, the returned assessment of $382,000 falls within his range of $280,627 to $462,691 (see Table 1).

22Mr. deJong’s suggested value of $320,000 falls within both ranges.

23Mr. deJong argues that his property is not comparable to properties with basements. There are four sale properties without basements however only three have time adjusted sales. The time adjusted sale values per sq. ft. of those three properties are: $113.73 for 126 Margaret Avenue, $134.95 for 925 James Street and $127.56 for 7417 North River Line. The average is $125.41 and when applied to the subject property results in a value of $255,216. Because these three properties are inferior to the subject property, the subject property would likely sell for more than $255,216.

24Mr. deJong argues that there is no market for properties assessed at $382,000. However there is a sale, 7792 McGregor Line, which sold for $483,000 in May 2015. Like the subject property, it has an indirect waterfront and MPAC’s evidence shows that it too is located outside of, but near, Wallaceburg. It is superior to the subject property in lot size, frontage and building size but it is older. It is not directly comparable to the subject property but it is similar enough to consider the value on a square foot basis. The time adjusted sale value per square foot of building area is $183.61 ($462,691/2,520 sq. ft.). Applying this value to the subject property results in a value of $373,641 ($183.61 x 2,035 sq. ft.). This is the best indication of the subject property’s current value.

25Based on the above analysis, I find that the subject property’s current value is $373,611 or $374,000, rounded, as of the January 1, 2016 valuation day.

EQUITY

26Once I have determined current value, s. 44(3)(b) of the Act requires that I look at the assessments of similar lands in the vicinity and determine if it would be fair or equitable to assess this property at its current value. The goal of the Act is to determine the correct current value. Any equitable reduction in the current value results in an incorrect current value. Consequently, an equitable reduction should only be made where there is clear evidence to support that such a reduction is warranted. In this regard, the burden of proof rests with the Appellant to establish, on a balance of probabilities, that an equitable reduction is required.

27Mr. deJong presented 24 properties which, he testified, were selected from “nicer” areas of Wallaceburg. They include both indirect and direct waterfronts on area rivers, with an average building area of 2,236 sq. ft. and an average assessed value of $274,000. He argued that there would be no market for his property at $382,000 with an abundance of lower priced homes in the area and, therefore, his property is over-assessed. I reviewed the 24 properties and found that all but one was significantly older than Mr. deJong’s property. This would certainly account for the lower assessed values. Six of the 24 properties have sales. I applied MPAC’s time adjustment factors to those sales and compared the time adjusted sale prices to their assessed values. Both the median and average assessment to sale ratio (“ASR”) was 0.98. This result indicates that MPAC’s model is working well but I would prefer a larger sample than five properties in order to determine whether an equitable adjustment is warranted.

28Mr. Johnson presented an equity study of 30 single family detached properties, not on water, located within 4.8 kilometres of the subject property. The designation ‘not on water’ includes indirect waterfront. The median ASR is 0.986. Mr. Johnson’s position is that because this value falls between MPAC’s preferred ASR rang of 0.95 to 1.05, and it has a 9.1 coefficient of dispersion, that MPAC’s model is working well and that an equity adjustment is not warranted.

29However, I am not satisfied with MPAC’s study. It is unclear whether the designation ‘not on water’ includes properties that have no view of a waterfront. The subject property is located ‘indirectly’ on waterfront with an unobstructed view of a river. I believe there is value to such a view, whether direct or indirect, and that the market is likely different than those properties that have no waterfront or waterfront view. Properties without some form of water view are not similar to the subject property. Therefore, I looked to the 17 properties presented by the parties that were identified as single family detached with direct or indirect waterfront and that have time adjustments to their sale values. This includes all of the sales in Table 1, Sales 4 to 10 in Table 2 and the six sales in the Appellant’s 24 properties.

30The median time adjusted ASR of these 17 sales is 0.905 which indicates that an adjustment for equity is warranted. This is because property like the subject property is being assessed, on average, at 90.5% of its current value. Applying this factor to the current value of the subject property of $374,000 results in an equitable assessment of $338,470, or $338,000 rounded.

DECISION

31The correct current value of the subject property is $374,000 for the 2017 and 2018 taxation years.

32An equitable reduction of the current value is required. The current value of the subject property is reduced by 90.5 per cent to $338,000 in order to achieve an equitable assessment with similar properties in the vicinity.

33Accordingly, the assessment is reduced from $382,000 to $338,000 for the 2017 and 2018 taxation years.