Assessment Review Board

Commission de révision de l'évaluation foncière

ISSUE DATE: October 12, 2018

FILE NO.: WR 155792

Assessed Person(s): Pamela Patricia Pelchat

Appellant(s): Pamela Patricia Pelchat

Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 31

Respondent(s): Township of The North Shore

Property Location(s): 1199 Riverview Road

Municipality(ies): Township of The North Shore

Roll Number(s): 5740-040-000-11700-0000

Appeal Number(s): 3314748 and 3270473

Taxation Year(s): 2017 and 2018

Hearing Event No. 702687

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

Heard: September 14, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Pamela Pelchat	Self-represented
MPAC	Richard Thomas
Township of The North Shore	No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

Background

1Pamela Pelchat is the owner of 1199 Riverview Road, located in the Township of The North Shore (the "Subject Property") which is situated between the Town of Spanish and the Municipality of Blind River in an area known as Serpent River. The property has 2.52 acres of land which is improved with a single family detached structure and five additional buildings.

2MPAC has assessed the current value of the Subject Property at $374,000 for the 2017 taxation year and $295,000 in the 2018 taxation year.

3Pursuant to the provisions of the Assessment Act (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, MPAC is required to assess this value as of the valuation date, January 1, 2016 ("current value").

4Pamela Pelchat (the "Appellant") has filed appeals for taxation years 2017 to 2018 with the Assessment Review Board (the "Board"), pursuant to s. 40 of the Act. It is her position that MPAC's assessment of current value is too high and that the correct current value is $200,000. At this hearing, MPAC takes the position that its assessed values should be reduced to $288,000 for both taxation years. The parties also disagree whether this property is waterfront or indirect waterfront.

5Pursuant to s. 40(11) of the Act, the Township of The North Shore is a party to this proceeding. However, it did not advise the Board of its position on the issues raised in these appeals and no one appeared at the hearing on its 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.

Relevant Legislation

7The Act states that:

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.

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

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:

3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

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.

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.

Issues

8The issues to be determined on this appeal are:

1. The correct current value of the Subject Property for the taxation years 2017 to 2018; and
2. Whether there should be an equitable reduction of the current value of the Subject Property pursuant to s. 44(3) (b) of the Act, and, if so, what the amount of this reduction should be.

Discussion, Analysis and Findings

Issue No. 1: What is the correct current value of the Subject Property for the taxation years 2017 to 2018.

MPAC's Evidence

9Richard Thomas represented MPAC and presented into evidence a valuation report dated April 3, 2018 which included five sales, a detailed description of the sale properties and the Subject Property, and photographs of the subject property. The report also included a time adjustment study of 568 sales with time adjustment factors to adjust sale value from the date they occurred to the January 1, 2016 valuation day.

10Mr. Thomas testified that he inspected the Subject Property in March 2018, reviewed and verified the Subject Property's data and re-measured all of the buildings on the property. He provided the following description of the property:

a. The site area is 440 feet wide and 197 feet deep. MPAC adjusted the lot area from 2.52 to 1.99 acres to account for the Canadian Shield portion located at the rear of the property.

b. The property services are private well and septic.

c. The one and a half storey single family detached house was built in 1990 and measures 2,241 square feet ("sq. ft.") with 1,451 sq. ft. on the main floor and 790 sq. ft. on the second floor. MPAC describes the house as having a unique and sturdy beam framework with a main fireplace that is built into the house and extends from the basement to the second floor. The interior has custom wood and stonework. MPAC applied an adjustment of -10% to reflect an accelerated depreciation of this structure.

d. There is a 2,370 sq. ft. detached garage, built in 1979, with 1,800 sq. ft. on the main floor and 570 sq. ft. of storage area on the second floor. The interior of the main floor is fully finished and heated by an oil furnace. MPAC applied an adjustment of -12% for the unfinished storage area on the second floor.

e. There is an 840 sq. ft. uninsulated barn, built in 1979, which is attached to the side of the garage.

f. There is a 752 sq. ft. workshop, built in 2004, which is used for storage. It is built eight feet above the ground using posts and beams. The area below the workshop is open and used as a parking area. MPAC has applied an adjustment of -30% for the quality of construction materials.

g. There are two sheds. The first has 747 sq. ft. and the second has 338 sq. ft.; both were built in 1980.

11Mr. Thomas submitted that MPAC considers properties like the Subject Property to be waterfront, even though there is a road between the Subject Property and the river. He submits that the 'waterfront' is reflected in sale prices, that MPAC assesses river and lake front properties similarly then applies a -17% adjustment to riverfront properties to reflect a difference in the marketplace. MPAC's evidence includes an aerial photograph showing that the Subject Property's driveway appears to cross Riverview Road to the water's edge where there is a boat launch.

12The Appellant submits that the boat launch is not hers but is a public facility. The land abutting the river, which is located south of Riverview Road, is not owned by the Appellant.

13MPAC presented five sales on four lakefront properties and argued they are all similar to the Subject Property. The sale prices range from $245,000 to $370,000 and the time adjusted sale values range from $246,803 to $383,499. MPAC's position is that these sales support the recommended current value of $288,000. MPAC uses this method of quantifying the value of residential properties by "bracketing" or by comparing the subject property to similar properties of both higher and lower values than the subject property. As long as the selected properties are reasonably similar to the subject property, it is a generally accepted method for determining the current value of a residential property.

MPAC's Submissions

14Relying on its evidence, MPAC submits that the correct current value for the taxation years 2017 to 2018 is $288,000. Therefore, MPAC is recommending that the assessment be reduced from $374,000 for the 2017 taxation year and $295,000 for the 2018 taxation year to $288,000.

Appellant's Evidence

15The Appellant represented herself. She testified that she and a second person inherited the Subject Property from her mother in 2014. She subsequently purchased the second person's share in the property and as of January 2015 she is the sole owner.

16The Appellant presented an appraisal report appraisal dated August 7, 2014 by John Shamess of John Shamess Appraisals. This report was produced for the purpose of probate and the Appellant further explained it was for the above-noted purchase from her co-heir.

17The Appellant also presented a GeoWarehouse document listing six nearby sales occurring between June and September 2016 with sale prices ranging from $25,000 to $99,000. She provided no physical descriptions of the sale properties such as the age, number and type of buildings, the size of the buildings and lots, the level of finish, number of storeys and bathrooms, etc.

Appellants' Submissions

18The Appellant argued that her property should not be valued more than $200,000 for the 2017 to 2018 taxation years.

19The Appellant argued that the increase in the assessed value between $180,000 for the January 1, 2012 valuation day and MPAC's values (whether $374,000, $295,000 or $288,000) for the January 1, 2016 valuation day is unwarranted in her area and too high.

20The Appellant objected to MPAC changing her assessment description to single family detached on water (MPAC's internal code for this is 313) because it has always been assessed as simply single family detached (MPAC's internal code for this is 301) in the past.

21She objected to MPAC comparing her property to lakefront properties. She argued that the Serpent River area is less desirable than lakefront areas. She also objects to MPAC comparing her property to properties that are a distance away, arguing they do not reflect the market place in the vicinity of the Subject Property.

Findings on Issue 1

22The 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.

23The Appellant's argument regarding the increase in assessment between the 2012 and 2016 valuation days is unrelated to determining a property's current value. A property's assessment on a valuation day reflects the market as it existed at that point in time. Each valuation day stands alone and is not related to other valuation days.

24The Appellant submitted an appraisal report which specifies that it "is intended for use to assist in probate and for no other use". I am disregarding the Appellant's appraisal report because the purpose of the document is for probate only and not to determine the current value as defined by the Act.

25The GeoWarehouse sales information submitted by the Appellant has insufficient information which would allow me to compare these sale properties to the Subject Property. As such, I am disregarding them.

26Both parties submit that properties located on lakes are superior to properties located on rivers. It is also reasonable to conclude that both riverfront and lakefront properties are superior to properties like the Subject Property which is not waterfront but has a river view and, at best, could be considered as indirect riverfront. I find that MPAC's comparable sales, all of which are located on lakes, are superior to the Subject Property in terms of waterfront. No evidence was presented to show that any of MPAC's sale properties have roads bisecting them from their waterfronts.

27I find that 1143 Wagoosh Lake Road, MPAC's Sales 1 and 2, is similar to the Subject Property. The residence is a similar age (2006), size (1,913 sq. ft.) and it has the same quality class (6.0). The residence is one and a quarter storey which is similar to the Subject Property's one and a half storeys. The lot is smaller (0.87 acres) and there is no basement and no additional buildings. However, this property is located on a lake which I find to be superior to the Subject Property's indirect riverfront. The first sale occurred in July 2013 for $255,000 and the second sale occurred in July 2015 for $245,000.

28I find that Sale 3, 10598 Wagoosh Lake Road is superior to the Subject Property. It has a larger frontage of 584 feet and a larger lot (5.1 acres) and it is located on a lake. The residence is smaller (1,368 sq. ft.) but the quality of construction is higher (6.5) and it is newer (2012). Like the Subject Property it has a large garage (802 sq. ft.) and a shed (206 sq. ft.). It sold in June 2016 for $350,000.

29I am disregarding Sale 4, 1704 Highway 538. It is not comparable to the Subject Property because it is a seasonal/recreational property and it is located on a lake more than 17 kilometres from the Subject Property.

30I am disregarding Sale 5, 1057 Vivian Road. It is not comparable to the Subject Property because it is located on a cul-de-sac, on a lake and almost 20 kilometres from the Subject Property.

31Based on the above sales the Subject Property's current value falls between $245,000 and $350,000.

32However, I find that the best indication of the Subject Property's current value is the 2015 sale of 1143 Wagoosh Lake Road. This is the most comparable property to the Subject Property and the 2015 sale is the closer of its two sales to the January 1, 2016 valuation day. Each property has aspects that are superior to the other and these differences likely balance each other out. Accordingly, I find that the Subject Property's current value is $245,000.

Issue No. 2: Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html) (b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what the amount of this reduction should be.

Appellant's Evidence

33The Appellant presented a document from MPAC's website indicating residential properties in the Township of The North Shore "will see an average assessment increase of approximately 1.7% in 2017" and that the assessed value of a typical residential home in the Township is $77,000 and the assessed value of a typical residence on water is $183,000.

Appellant's Submissions

34The Appellant argues that her assessment should not exceed $200,000.

MPAC'S Evidence

35MPAC presented an Equity Analysis Report which included 30 sales of waterfront, seasonal waterfront, as well as first and second tier on water seasonal/recreational properties. The median assessment to sale ratio ("ASR") of these sales is 0.841 with a 15.5 coefficient of dispersion (COD).

36The Equity Analysis Report provides that "MPAC takes the position that equity is achieved if the median ASR falls between 0.95 – 1.05". The Report also provides that the International Association of Assessing Officers "standards require CODs of not more than 15 for residential properties . . . and not more than 20 for rural and recreational waterfront" properties.

MPAC's Submissions

37Relying on its evidence, MPAC submits that an equitable reduction of the current value for the 2017 to 2018 taxation years is not required. MPAC argues that while the ASR falls outside of the acceptable range of 0.95 and 1.05, an adjustment for equity is not required because the COD is 15.5 which does not exceed the standard of 20 for rural and recreational waterfront properties.

Findings on Issue 2

38The purpose of an equitable reduction has been described by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., [1968] 2 O.R. 388, 1968 CanLII 183 (ON CA) at page 2:

A prime objective of municipal taxation is the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the application of a uniform mill rate upon the assessed value of the ratepayer's taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

In addressing equity in assessment, the Court, at page 6, also noted that "an assessment made at the actual value of lands and buildings … would be an unequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred [emphasis added]".

39However, 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.

40The Appellant's evidence is general in nature, speaking only to averages in the Township of The North Shore. It does not assist me in determining a specific value for an equity reduction but it does suggest that further enquiry is justified.

41Based on MPAC's testimony, I am satisfied that MPAC assessed the subject property similarly to the properties in its Equity Analysis Report as they are all waterfront or indirect waterfront properties. I disagree with MPAC's argument that an acceptable COD negates median ASR which clearly indicates that MPAC's model is tending to assess similar properties below their market values. As such, I find that an equity adjustment is warranted.

42Applying the median ASR of 0.841 to the current value of $245,000 results in a value of $206,045, or $206,000, rounded.

DECISION

43The correct current value of the Subject Property is $245,000 for the 2017 to 2018 taxation years in the residential property class.

44An equitable reduction of the current value of the Subject Property, pursuant to s.44.(3)(b) of the Act is required. The current value of the Subject Property is reduced to $206,000.

45Accordingly, the assessment is reduced from $374,000 to $206,000 for the 2017 taxation year and from $295,000 to $206,000 for the 2018 taxation year.