Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: October 15, 2018 FILE NO.: WR 155843

Assessed Person(s): William John Lee and Kathryn Anne Lee Appellant(s): William John Lee and Kathryn Anne Lee Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 07 Respondent(s): Municipality of Trent Lakes

Property Location(s): 97 West Clear Bay Road Municipality(ies): Municipality of Trent Lakes Roll Number(s): 1542-020-102-26100-0000 Appeal Number(s): 3226259 and 3292981 Taxation Year(s): 2017 and 2018 Hearing Event No.: 703573

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

Heard: September 6, 2018 in Trent Lakes, Ontario

APPEARANCES:

Parties	Representative
William John Lee and Kathryn Anne Lee	William John Lee
MPAC	Ron Donnelly
Municipality of Trent Lakes	No one appeared

MEMORANDUM OF ORAL DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH ON September 6, 2018

Background

1William John Lee and Kathryn Anne Lee (the “Appellants”) are the owners of 97 West Clear Bay Road (the “Subject Property”), which is located in the Municipality of Trent Lakes.

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 $731,000 for the 2017 and 2018 taxation years.

4The Appellants have filed appeals for the taxation years 2017 and 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 $500,000. At this hearing, MPAC takes the position that its assessed value should be $821,000. However, MPAC is not seeking an increase and asks to have the assessed value confirmed at $731,000 for the 2017 and 2018 taxation years.

5Pursuant to s. 40(11) of the Act, the Municipality of Trent Lakes is a party to this proceeding. However, no one appeared at the hearing on the Municipality’s 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 not required. The Appellants assert no position on equity. Therefore, equity is not at issue at this hearing.

7At the completion of the hearing, the Board rendered an oral decision and MPAC requested written reasons. For the reasons that follow, the Board finds that the current value is $741,000 and this value supports the returned assessment of $731,000. Therefore, the Board confirms the returned assessment of $731,000 for the 2017 and 2018 taxation years. Pursuant to s. 44(3)(b) of the Act, an equitable reduction of this value is not required.

RELEVANT LEGISLATION

8The 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.

Burden of proof

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.

ISSUE

9The issue to be determined on these appeals is the correct current value of the Subject Property for the taxation years 2017 and 2018.

Description of the Subject Property

10The Subject Property is a two-storey, single-family detached dwelling, located at 97 West Clear Bay Road, in the Municipality of Trent Lakes.

11The Subject Property was built in 2006, with a total lot size of 1.49 acres, a total building area of 2,213 square feet (“sq. ft.”), and a quality of construction rating 7.

Discussion, Analysis and Findings

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

MPAC’S Evidence

12Ron Donnelly represents MPAC. Mr. Donnelly presents a Valuation Report, dated October 23, 2017, which he prepared and testifies to the information contained in the report.

13Mr. Donnelly testifies that he inspected the Subject Property on October 12, 2017. He states that during the inspection he reviewed and confirmed that the Subject Property data and classification are correct.

14Mr. Donnelly testifies that the Subject Property is located on Crystal Lake and is a year round dwelling, although properties on this lake are primarily used seasonally. Mr. Donnelly testifies that during his sales investigations he observed that sales on this lake are trending upwards, and that sale prices have ranged from approximately $250,000 to $1,200,000 over the past four years.

15In support of current value, Mr. Donnelly presents an analysis of four sales on Crystal Lake, in the same homogeneous neighbourhood as the Subject Property. The analysis contained both actual and time adjusted sale prices. These suggested comparable properties are located at 98 Fire Route 363, sold in 2016 for $586,535; 22 Fire Route 383, sold in 2016 for $741,947; 2190 Crystal Lake Road, sold in 2017 for $573,301; and at 47 Peters Island Road, sold in 2015 for $888,037.

16The analysis shows that these four sales range from $573,301 to $888,037, with an average total building area of 1,847 sq. ft., an average lot size of 0.71 acre, and an effective year built of 1989. Based on these four sales, Mr. Donnelly is of the view that the sale at 22 Fire Route 383, sold in 2016 for $741,947; and 47 Peters Island Road, sold in 2015 for $888,037 are the most similar to the Subject Property and estimate the current value to be $821,000.

MPAC’s Submissions

17On cross-examination, MPAC argues that the sale at 119 West Clair Bay Road that sold in 2015 for $385,000 should not be relied on, because it is a private sale to the Appellants’ family, and that it is significantly older and smaller than the Subject Property.

18MPAC argues that the appraisal value of $500,000 should not be relied on, because it was an oral testimony and that the letter submitted as evidence was in regard to financing.

19Relying on its evidence, MPAC submits that the correct current value is $821,000. However, MPAC is not seeking an increase in assessment. Therefore, MPAC asks that the returned assessment of $731,000 be confirmed.

Appellants’ Evidence

20William John Lee represents himself and Kathy Anne Lee. The Appellants testify that individuals in the 416 area code positively impact the sale prices of cottage country properties, because they are willing to pay higher prices for properties in areas like the Subject Property.

21The Appellants also argue that since 2008, the assessed value of the Subject Property has risen from $519,000 to $731,000, which reflects an increase of $212,000.

22In support of current value, the Appellants present an estimated value of $500,000 from Haliburton Appraisal Services Inc., an independent appraiser commissioned by a financial institution in the spring of 2015, for the Subject Property. As proof of this appraisal, the Appellants present a letter from Tandia Financial Credit Union (“Tandia”) to show that he obtained an 80% ($400,000) financing based on the appraisal.

23The Appellants state that there are no reasonable comparable properties, and present a sale which occurred at 119 Clear Bay Road, in 2015 for $385,000 as the closest suggested comparable property. The Appellants state that the suggested comparable property has a frontage of 215 feet, a total site area of 1.38 acres and built in 1953. However, the Appellants were not sure of the total building area, except to say that the cottage is very old and very small. The Appellants also confirm on cross-examination that this sale was a private sale between the previous owner and his family.

Appellants’ Submissions

24Relying on their evidence, the Appellants submit that the correct current value for taxation years 2017 and 2018 should be $500,000.

Findings on Current Value

25Under s. 44.(3)(a) of the Act, the Board must first 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 a property on the valuation date or close to it.

26In regard to the Appellants issue that the assessed value of the Subject Property increased by $212,000 from 2008 to the valuation date January 1, 2016 the Board rejects this argument, because assessments are not based on increases from one assessment period to another. The Act 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.

27In regard to the Appellants argument that individuals from the 416 area code are having a positive impact on the sale values of properties in cottage country areas because of their willingness to pay higher prices, the Board finds if anything, this statement supports MPAC’s argument that property sale prices have been rising.

28In reviewing MPAC’s sales of suggested comparable properties in support of current value, the Board did not rely on the sale which occurred at 2190 Crystal Lake Road, sold in 2017, because the sale date is too far removed from the valuation date of January 1, 2016 to be a true test of current value.

29The remaining three sales at 98 Fire Route 363, sold in 2016 for $586,535; 22 Fire Route 383, sold in 2016 for $741,947; and at 47 Peters Island Road, sold in 2015 for $888,037 have a median sale price at $741,947, or $741,000 rounded.

30The Appellants presented an appraisal value estimated at $500,000; and a sale at 119 Clear Bay Road, in 2015 for $385,000. The Board rejects that evidence. The Appellants evidence of an estimated appraisal value of $500,000 is only supported by the letter from Tandia in which they approve financing of $400,000. The Appellants present no official appraisal report from Haliburton Appraisal Services Inc. The letter from Tandia was for financing, and provides no information to assist the Board in its determination of current value. The Board also rejects the sale at 119 Clear Bay Road, in 2015 for $385,000, because the Appellants testify that this was a private sale between the previous owner and his family. It was not an open market sale.

31Based on the above evidence, the Board accepts the median sale price of $741,000, and finds this value to be the best evidence of current value. The Board finds the current value to be $741,000.

DECISION

32The Board finds that the current value of $741,000 supports the returned assessment of $731,000. Therefore, the Board confirms the current value of the Subject Property at $731,000 for the 2017 and 2018 taxation years.