Manning v. Municipal Property Assessment Corporation Region 18, 2018 CanLII 96171

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 10, 2018

FILE NO.: 155593

Assessed Person(s): David Gary Manning, Anne Julia Manning

Appellant(s): David Gary Manning, Anne Julia Manning

Respondent(s): Municipal Property Assessment Corporation Region 18

Respondent(s): City of St Catherines

Property Location(s): 70 Golden Boulevard

Municipality(ies): City of St Catherines

Roll Number(s): 2629-060-045-57600-0000

Appeal Number(s): 3279462 and 3309404

Taxation Year(s): 2017 and 2018

Hearing Event No. 703277

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

Heard: August 23, 2018 in St Catherines

APPEARANCES:

Parties	Representative
David Gary Manning and Anne Julia Manning	Self-represented
MPAC	George Kaldenbach
City of St Catherines	No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1David Gary Manning and Anne Julia Manning (the “Appellants”) are the owners of 70 Golden Boulevard (the “Subject Property”), which is located in the City of St Catherines.

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, 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 $756,000 for the 2017 taxation year and at $718,000 for the 2018 taxation year.

4The Appellants have filed appeals for taxation years 2017 to 2018 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 should be $680,000. At this hearing, MPAC takes the position that its assessed value should be $720,000 for the 2017 and 2018 taxation years.

5Pursuant to s. 40.(11) of the Act, the City of St Catherines is a party to this proceeding. However, 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. MPAC takes the position that an equitable reduction is required. The Appellant also asserts that an equity reduction is required.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds the current value of the Subject Property is $611,000 for the 2017 and 2018 taxation years.

8The Board finds that an equitable reduction is required and that the equitable value is $556,000 for the 2017 and 2018 taxation years. Therefore, the Board reduces the assessment from $756,000 to $556,000 for the 2017 taxation year and reduces the assessment from $718,000 to $556,000 for the 2018 taxation year.

Relevant Legislation

9The relevant sections of the Act are as follows:

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:

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

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

10The issues to be determined on this appeal are:

1. The correct current value of the Subject Property for the taxation years 2017 and 2018.
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.

Description of the Subject Property

11The Subject Property is a two-storey, single-family detached dwelling, located at 70 Golden Boulevard, in the City of St Catherines. The Subject Property was built in 1990, with a total building area of 2,654 square feet (“sq. ft.”), and a total lot size of 0.22 acres.

DISCUSSION, ANALYSIS AND FINDINGS

Issue No. 1: The correct current value of the Subject Property for the taxation years 2017 and 2018.

MPAC’s Evidence

12George Kaldenbach represents MPAC. Mr. Kaldenbach presents a Valuation Report, dated April 3, 2018, which he prepared and testifies to the information contained in the report.

13Mr. Kaldenbach states that in 2013 the Subject Property had received a market adjustment of negative ten per cent for a declining market at that time. However, that negative adjustment has been removed for this current valuation date of January 1, 2016.

14Mr. Kaldenbach states that he requested an inspection of the Subject Property and it was declined by the Appellants. Instead, Mr. Kaldenbach testifies that he conducted a drive-by exterior inspection of the Subject Property on March 27, 2018. Mr. Kaldenbach also states that it is his opinion that the current value would have been lower than MPAC’s proposed assessment of $720,000 as stated below, if the Appellants would have allowed the inspection.

15In support of current value, Mr. Kaldenbach presents an analysis of four sales (three of which are located in the same homogeneous area as the Subject Property, and the fourth in a neighbouring area). The analysis contained both actual and time adjusted sale prices. These suggested comparable properties are located at 55 Port Master Drive, sold in 2013 for $728,900 (time adjusted sale price of $869,731); at 57 Dalemere Crescent, sold in 2015 for $890,000 (time adjusted sale price of $936,417); at 43 Golden Boulevard, sold in 2015 for $520,000 (time adjusted sale price of $543,341); and at 3 Village Green Drive, sold in 2017 for $1,100,000 (time adjusted sale price of $1,003,802).

16Mr. Kaldenbach testifies that he considers the suggested comparable property at 55 Port Masters Drive similar to the Subject Property; 57 Dalemere Crescent superior to the Subject Property because it is significantly larger in total building area (728 sq. ft. larger) and smaller in total lot size; 43 Golden Boulevard is inferior because it does not back on to water as the Subject Property does; and 3 Village Green Drive, similar to the Subject Property.

17Mr. Kaldenbach testifies that the Subject Property’s assessment includes a water variable adjustment of positive $151,000. He also testifies that the assessed value of the suggested comparable properties at 55 Port Master Drive, includes a water variable adjustment of positive $159,000; 57 Dalemere Crescent, includes a water variable adjustment of positive $164,000; 3 Village Green Drive, includes a water variable adjustment of positive $165,000; and 43 Golden Boulevard receives no water variable adjustment.

18On cross-examination Mr. Kaldenbach testifies that the water variable adjustment for 43 Golden Boulevard for comparison to the Subject Property would be $122,000.

19MPAC’s analysis of these four suggested comparable properties shows that the actual sale prices range from $520,000 to $1,100,000; and the time adjusted sale prices range from $543,341 to $1,003,802. The analysis also shows that these suggested comparable properties have on average a total building area 2,874 sq. ft.; a lot size 9,350 sq. ft.; a quality of construction of 7.62; and year built 1982.

MPAC’s Submissions

20Relying on its evidence, MPAC submits that the correct current value based on the sale prices of the most similar suggested comparable properties is $800,000.

Appellants’ Evidence

21The Appellants represent themselves. The Appellants testify that the Subject Property is located in St George’s Point, which is a subdivision of one hundred and four properties, built over the period 1985 to 1989 by one of three builders. They state that the subdivision is surrounded by water on three sides, although the lots do not extend to the water.

22The Appellants testify that the location of properties 66 to 90 Golden Boulevard and 29 to 37 MacIntosh on an arm of Marindale Pond known as Richardson’s Creek, is a significant factor in the value of these properties. They testify that in 1995 when they purchased the Subject Property the water in Richardson’s Creek was clear and used throughout the rowing season for practice. Now the view is unattractive, there is an unpleasant smell, and there is no access to the water due to erosion and slippage of the steep banks to the water. The Appellants testify that Richardson’s Creek is the watercourse which drains agricultural land to the south and west, and flows into the pond under the bridge on Martindale Road. They state that the creek deposits silt in the pond; the area cannot be dredged; weeds cannot be cut; and the creek can no longer be used for rowing, because of fish habitat. They provide photographs to show the view and condition Richardson’s creek.

23By contrast, the Appellants state that properties 18 to 56 Golden Boulevard, which border Martindale Road have an extensive view of the Henley Rowing Course with clear water. The pond is much deeper and faster-flowing than Richardson’s Creek, because it is fed by the Twelve Mile Creek and the growth of weeds is artificially controlled. Therefore, the Appellants argue that properties on Martindale Pond have greater value than properties on Richardson’s Creek.

24The Appellants testify that the Subject Property is in its original state and is maintained, whereas the other properties in the subdivision have been upgraded since their construction. It is the view of the Appellants that the estimated cost of repair and upgrade to the Subject Property would be approximately $100,000.

25The Appellants are of the view that the Subject Property is assessed too high as compared to neighbouring properties and as compared to other properties in the subdivision. The Appellants offer the following comparative analysis of the assessed values of suggested comparable properties located in the same subdivision, as compared to the assessment of the Subject Property.

26Comparative Analysis 1: The Appellants testify that the average change for the 104 properties in the subdivision is 8 per cent as compared to the Subject Property at 17.2 per cent in 2016, and is the second highest in the subdivision for which there is no rational explanation.

27Comparative Analysis 2: The Appellants claim that the difference in assessments between the neighbouring properties that sold during the period 2012 to 2016 and the Subject Property is higher than at any time during the past twenty years.

28Comparative Analysis 3: The Appellants testifiy that the assessments of their neighbours to the east at (66 and 68 Golden Boulevard) have increased 14 to 16 per cent; and the assessments of the neighbours to the west at (72 and 78 Golden Boulevard) have increased between 3 and 5 per cent. Whereas, the Subject Property is higher at 17.2 per cent.

29Comparative Analysis 4: The Appellants argue that two suggested comparable properties that do not back on to water and are located directly across the street from the Subject Property at 41 Golden Boulevard, sold in 2014 for $490,000 is assessed 5 per cent higher than the sale price; and 43 Golden Boulevard, sold in 2015 for $518,000 is assessed at true market value. They also state that a comparative analysis of the 2016 assessment shows that the Subject Property is assessed 16 to 18 percent higher than the average assessments of these two suggested comparable properties over the past fifteen years. Based on this comparative analysis, the Appellants are of the view that the current value of the Subject Property should be no more than $663,000.

30Comparative Analysis 5: The Appellants argue that the assessment of the Subject Property is higher than five properties at (76, 78, 80, 86 and 88 Golden Boulevard) in the same location, with same house size, age and quality. They testify that the ratio for the 2016 assessment is approximately 10 per cent higher than the average over the past fifteen year. They state that the property at 78 Golden Boulevard was sold in 2012 for $657,500 and was assessed at $760,000 which is 15.6 per cent higher than the sale price. They also testify that the 2016 assessment for 78 Golden Boulevard at $784,000 is 6 per cent higher than its most recent sale in 2012. The Appellants argue that if 78 Golden Boulevard was assessed correctly, then the assessment of the Subject Property should be no more than $674,000.

31The Appellants testify that the Time Adjustment Factor, based on five hundred and fifty-nine sales for the period January 4, 2013 to March 31, 2017 presented into evidence by MPAC are substantially different from the Time Adjustment Factors posted on the MPAC’s website for the period January 1, 2012 to December 31, 2015.

32The Appellant also presented a list of seventeen sales which occurred in the St George’s Point subdivision over the period January 1, 2012 and December 31, 2015. These suggested comparable properties are located at (1, 17, 17, 19, 21, 31, 41, 43, 78 and 102 Golden Boulevard; 2 Empire Court; 9, 11, and 16 MacIntosh Crescent; and 1, 5 and 7 Spartan Court). The sale prices of these suggested comparable properties ranges from $409,500 to $795,000 and reflect a median sale price of $516,000.

Appellant’s Submissions

33The Appellants argue that MPAC compares the sales of suggested comparable properties that are superior and inferior to the Subject Property, and ignored the sales which occurred within St George’s Point subdivision. They argue that MPAC uses sales data from January 4, 2013 to March 31 2017, whereas, sales data from January 1, 2012 to December 31, 2015 were not used by MPAC.

34Relying on their evidence, the Appellants submit that the correct current value for taxation years 2017 to 2018 should be $680,000.

Findings on Issue 1

35Under s. 44.(3)(a) of the Act, the Board must determine “the current value of the land.” The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the property on the valuation date or close to it. When that evidence is unavailable, the sales of similar properties on or near the valuation day, is the next best evidence of value.

36In reviewing MPAC’s sales evidence, the Board did not rely on the two sales which occurred in 2013 and 2017, because these two sales are too far removed from the valuation date of January 1, 2016 to provide any meaningful test of current value.

37The remaining two sales at 57 Dalemere Crescent, sold in 2015; and 43 Golden Boulevard, sold in 2015 will be used in the evaluation of current value below.

38In reviewing the seventeen sales presented by the Appellants, the Board did not rely on the sales which occurred in 2012, 2013 and 2014, because these eleven sales are too far removed from the valuation date of January 1, 2016 to provide any meaningful test of current value. The Board also did not rely on five of the sales which occurred (31, and 21 Golden Boulevard; 9 and 16 MacIntosh Crescent; and 1 Spartan Court) because the Appellants failed to provide crucial information (building area, lot size, age, quality and locational features) necessary to draw any comparison to the Subject Property for the determination of current value.

39The remaining sale at 43 Golden Boulevard (also presented by MPAC) will be used in the evaluation of current value.

40In regard to the water condition and view of Richardson’s Creek, the Board puts no weight on this issue. The Board finds that the Appellants presenter no quantitative evidence to demonstrate the impact on the assessed value of the Subject Property, except for the sale at 43 Golden Boulevard which will be used in the evaluation of current value.

41In regard to the condition of the Subject Property and the estimated cost of $100,000 for repair and upgrades, the Board puts no weight on this issue. The Appellants’ view is not supported by any official and detailed estimates for the $100,000 by a contractor.

42In regard to the issues argued in Comparative Analysis 1 to 5, that the Subject Property is assess too high as compared to the assessments of neighbouring properties; and as compared to other properties in the subdivision, the Board rejects these arguments. Assessment is not based on percentage increases from one assessment period to another. The Act clearly states that assessment is based on current value, which means the amount of money a property would realize if sold at arm’s length, by a willing seller to a willing buyer in the open-market, as of the valuation date January 1, 2016.

43In regard to the issue of the time adjustment factor, the Board accepts the time adjustment factor presented at this hearing by MPAC. MPAC presents undisputed evidence specific to the appeals at hand, to show how the time adjustment factor was determined. On the contrary, there is no evidence presented to show how the time adjustment factor posted on MPAC’s website was determined, and whether or not it is specific to the appeals at this hearing. As such, the Board rejects the time adjustment factor posted on MPAC’s website.

44In reviewing the remaining two sales at 57 Dalemere Crescent (by MPAC); and 43 Golden Boulevard (by MPAC & the Appellants), the Board finds the sale at 43 Golden Boulevard, presented by both MPAC and the Appellant, to be the best evidence in support of current value. This comparable property sold at a time adjusted rate of $543,341 ($207.06 per sq. ft. based on total building area). The Board accepts the testimony of both parties that this comparable property is directly across the road from the Subject Property, and it is almost identical in every respect, except that this comparable property does not back on to water as the Subject Property.

45Applying this time adjusted sale price per sq. ft. to the Subject Property results in a value of $549,537 ($207.06 x 2654 sq. ft. of total building area). The Board finds that a water variable adjustment of $61,000 ($122,000 x 0.5) is warranted, because photographs of Richardson’s Creek and undisputed evidence have supported the issue that the waterway has deteriorated (weedy, silt, smell, fish habitat etc.) over the years. When this value is adjusted for water variable for comparison to the Subject Property it results in a value of $611,000 rounded ($549,537 + $61,000 water variable adjustment as the Subject Property).

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.

MPAC’s Evidence

46MPAC presents an Equity Analysis Report in which the assessments of 39 comparable properties are compared to their respective sale prices to determine the Assessment to Sales Ratio (“ASR”). The ASR is computed by dividing the assessed values of a property sold, by its sale price.

47MPAC submits that these 39 comparable properties are single-family detached (not on water), single-family detached (on water), and seasonal/recreational dwelling – first tier on water, which sold over the period January 1, 2013 to April 3, 2017, within 0.5 kilometres of the Subject Property.

48The analysis of these thirty-nine comparable properties shows a Level of Appraisal (“LOA”) of 0.899 and a Coefficient of Dispersion (“COD”) of 10.5. Based on this finding, MPAC is of the opinion that an equity reduction is required, because the finding falls outside of MPAC’s standards of 0.95 to 1.05 for the LOA and 15 per cent for the COD.

MPAC’s Submissions

49Relying on its evidence, MPAC submits that an equitable reduction of the current value for the 2017 to 2018 taxation years is required. Applying the LOA of 0.899 to the estimate of value of $800,000 results in a value of $720,000 ($800,000 x 0.899) rounded.

Appellants’ Evidence

50The Appellants present the sales of 17 comparable properties which sold over the period July 2012 to November 2015. The Appellants testify that these sales are time adjusted using the time adjustment factor found on MPAC’s website, for all residential properties in the City of St Catherines and the City of Thorold.

51The Appellants testify that the sales of these seventeen comparable properties have an average ASR of 0.99 and a COD of 7.35.

Appellant’s Submissions

52Based on the COD of 7.35, the Appellants take the position that an equitable reduction is required.

Findings on an Equitable Reduction

53The 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 paragraph 6:

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 paragraph 35, also noted that “an assessment made at the actual value of lands and buildings … would be an inequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred”.

54However, 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.

55The term “vicinity” is not defined in the Act, but refers to the appropriate geographical area that will yield meaningful comparable properties (see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 16 O.R. (3d) 83, 1993 CanLII 8621 (Ont. C.A.) at page 6).

56In reviewing the evidence in support of an equity reduction by MPAC and the Appellant, the Board does not rely on the sales with occurred over the period 2012 to 2014; and 2017, because these sale dates are too far removed from the valuation date of January 1 2016, to provide a true test of equity. However, the sales which occurred over the period 2015 and 2016 are analyzed to determine if an equity reduction is required.

57In reviewing the Appellants’ evidence, the Board rejects the Appellant’s assertion that an equity reduction is required because the COD of 7.35 per cent falls outside MPAC’s acceptable standards. The Board accepts the COD standards of MPAC and the International Association of Assessing Officers (“IAAO”) which is no more than 15 per cent for residential properties, and finds that the COD of 7.35 per cent falls within the acceptable standard.

58In regard to the Appellants six sales (of 17 sales) that occurred in 2015 with an average ASR of 0.958. The Board finds that an equitable reduction is not required because the average ASR of 0.958, falls within the MPAC’s acceptable standards of 0.95 – 1.05.

59In regard to MPAC’s 23 sales (of 39 sales) that occurred in 2015 and 2016, they have an ASR of 0.91. The Board finds that an equitable reduction is required because average ASR of 0.91, falls outside the MPAC’s acceptable standards of 0.95 – 1.05.

60Based on the evidence in support of equity, the Board accepts MPAC’s ASR of 0.91, which supports an equity reduction. Applying the equity adjustment to the current value determined above results in a value of $556,000 ($611,000 x 0.91).

61Based on all of the evidence the Board finds that an equitable assessment is $556,000.

DECISION

62The current value of the Subject Property is $611,000 for the 2017 and 2018 taxation years. Equity requires that the Subject Property be assessed at 91% of that value, or $556,000. The Board therefore reduces the assessment for the 2017 taxation year from $756,000 to $556,000 and reduces the assessment for the 2018 taxation year from $718,000 to $556,000.