Catherine Joy Greven and Marcia Elizabeth Julian v. Municipal Property Assessment Corporation, 2019 CanLII 109533

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: November 15, 2019

FILE NO.: WR 162492

Assessed Person(s): Catherine Joy Greven and Marcia Elizabeth Julian

Appellant(s): Catherine Joy Greven and Marcia Elizabeth Julian

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 17

Respondent(s): Lake of Bays Township

Property Location(s): Con 7, PT LOT 10, RP35R13746

Municipality(ies): Lake of Bays Township

Roll Number(s): 4427-020-008-10400-0000

Appeal Number(s): 3321776 and 3362818

Taxation Year(s): 2018 and 2019

Hearing Event No.: 724290

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

Heard: September 16, 2019 in Dwight, Ontario

APPEARANCES:

Parties Counsel+/Representative

Catherine Greven Self-represented

MPAC Sue Hummel

Lake of Bays Township No one appeared

MEMORANDUM OF ORAL DECISION DELIVERED BY LESLIE FLEMMING SEPTEMBER 16, 2019

INTRODUCTION

1Catherine Joy Greven and Marcia Elizabeth Julian (collectively the “Appellants”) appeal the 2018 and 2019 property tax assessment of their property.

2The Subject Property is a small lot, just under ten acres of forested land owned by members of the Julian family since 1903. It was originally part of a larger tract of land. However, Ms. Greven states that the Township deemed that a colonization road had crossed some of the Julian family property. In 1989 a survey of the Julian property was conducted by the Township, which shows that the Subject Property was severed from the more southern lakeside properties by the creation of the 66-foot wide colonization road. The small property created by that severance is the Subject Property. The road abutting the property is not a serviced road, which means that the Subject Property was effectively cut off from any other lands belonging to the Julian family, and was effectively cut off from any form of development because it was now inaccessible by vehicles except seasonally. As such, it was neither appropriate nor suitable for any kind of development, nor was it a candidate for the managed forests program because it was too small. Ms. Greven described it as “a little orphan”.

3The Subject Property assessment was returned for the 2018 and 2019 taxation years in the amount of $19,500. Ms. Greven appeals this amount, and submits that, because the land is basically inaccessible, unbuildable and essentially of no use, it is at most worth between $3,450 to $10,000.

4The purpose of today’s appeal is to determine the current value of the Subject Property effective January 1, 2016. This is the “valuation day” for the current assessment cycle. Current value is defined as,

“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”.

5The Board’s job in any assessment appeal is to make a finding based on the evidence presented by the parties and to make a determination of the reasonable and correct current value of the lands. The Board stands in the shoes of MPAC, as it were. Its authority is entirely derived from the statute. The Board has the jurisdiction to change an assessed value if it finds that the evidence supports a different value.

6In this matter, MPAC’s evidence was presented by Property Valuation Analyst, Sue Hummel. Ms. Hummel prepared a valuation report and an equity report. She explained that she used the direct sales comparison method of assessing the current value of the Subject Property. The Subject Property is classified as residential land. Ms. Hummel selected five arms’ length vacant residential property sales occurring in Huntsville, Gravenhurst and the Lake of Bays area between October 2013, and March 2016. The reason for expanding the search beyond the borders of Lake of Bays Township was because there were insufficient sales of similar properties occurring in the Lake of Bays Township itself, requiring expanding the search to other parts of the District of Muskoka.

7MPAC’s comparable sales were parcels of vacant land ranging in size from less than one acre to 25 acres. All the sold properties were unbuildable just like the Subject Property. Some had seasonal access by road, while two of the properties had no road access at all. The properties sold between 2013 and 2016. Their values ranged from over $30,000 per acre (Property 3 and Property 5) to less than $1,000 per acre (Property 2).

8Ms. Hummel also testified about the issue of equity. “Equity” as used in the Assessment Act, R.S.O. 1990, c. A.31, as amended, refers to an equality in assessment of similar properties in a given vicinity or area. Proof of equity is usually given by calculating a median Assessment-to-Sale-Ratio (“ASR”) for a number of sales of similar properties in the vicinity. This helps determine how frequently MPAC’s assessment values approximate the actual sales prices of property. Ms. Hummel’s ASR results indicated a high degree of correlation between sales values and assessments. The Appellants bear the onus of proving that an equitable adjustment is appropriate. The Appellants did not lead any of their own evidence respecting of the issue of equity as contained in s. 44(3)(b) of the Act. Therefore, the Board will not make a ruling in respect of this issue.

9Following the presentation of evidence by MPAC, Catherine Greven presented the evidence for the Julian family. In addition to setting out a brief history of the small parcel, Ms. Greven advised that the Subject Property is one-third water because of the presence of a large pond. Because it is such a small parcel, she said, there is no possibility of putting this acreage into the Managed Forest program. The Julian family members intend to keep it in its natural state, but Ms. Greven is of the opinion that it is not worth $19,500. Taxation is based on the assessed value, which means the continued assessment of what Ms. Greven describes as a virtually unusable parcel of land, will put a financial burden on the Julian family which, in Ms. Greven’s opinion, is unjustifiable.

10Ms. Greven presented evidence of the assessed values of some other, similar lands in the area. They included three parcels all approximately 100 acres in size, and a fourth parcel approximately 200 acres in size. All were assessed at less than $1,000 per acre. The per acre values of the four properties were $570, and $522, and two properties at $345 per acre. The latter properties included the two hundred-acre parcel. Ms. Greven multiplied the various per acre figures by the 9.85 acres of the Subject Property and arrived at values of between $3,398.25 and $5,614. These values, Ms. Greven argues, are much more reasonable values for the Subject Property.

Analysis and Decision

11The Board, and the assessment/appraisal industry, favour the use of property sales rather than assessed values in trying to calculate “current value”. When one relies on other assessed values, it begs the question as to why the property assessment being appealed is incorrect while other examples are not. Only by taking into account the amounts of money at which property was transacted on the open market is it possible to determine the current value of the land. For this reason, I preferred the evidence presented by MPAC over the evidence presented by the Appellants.

12It is particularly useful to have similar properties in the same vicinity; the closer the lands are to Subject Property, the more compelling the evidence of value. In this case, MPAC had to look outside the Township of Lake of Bays in order to find a sufficient number of sales to estimate a value. Clearly the examples of vacant residential land sales produced by MPAC proved that seemingly small, inaccessible lots have value even where their usefulness for future development is nil or severely limited. The five properties produced by MPAC varied in size from 25 acres down to 0.16. When we calculate a per-acre value, they ranged from $960 per acre for a vacant 25-acre parcel up to $15,000 for a 0.16 acre parcel or $93,750 per acre. The same effect is seen with development land, farmland, managed forests and other types of property, where the value per acre decreases when the size of the parcel increases. This is commonly referred to as the “economies of scale”. The various comparable parcels produced during this hearing by both parties proved that economies of scale apply equally to vacant, unbuildable land as it does to other types of land.

13In this case, the assessment of 9.85 acres at $19,500 works out to $1,979.69 per acre. Of the comparable vacant properties selected by MPAC, the closest in size to the Subject Property is a 10-acre parcel sold in 2013 for $15,468 (time-adjusted) or $1,546.80 per acre. One other property sold for less per acre than the assessed value of the Subject Property and that was a 25-acre parcel sold in 2014 for $960 an acre. The three other vacant property sales selected by MPAC sold for $10,000, $75,000 and $93,750 per acre; these properties were all one acre or less in size and located south of Huntsville while still in the District of Muskoka. All the properties selected for comparison were described as vacant and of “non-conforming use” like the Subject Property.

14The property closest in size to the Subject Property is Con 13, Pt. Lot 25 in the Town of Huntsville; this is the 10-acre parcel sold for $1,546.80 per acre. MPAC’s evidence disclosed that this parcel has no road access whatsoever, while the Subject Property, almost identical in size, has seasonal road access. Therefore, I find that the per acre value of $1,979 per acre is justified when contrasted with this inferior property. The only other less expensive property in the list of comparable property sales selected by MPAC is the 25-acre parcel (Con 6, Pt. Lot 21, Town of Huntsville). This property also has no road access, unlike the Subject Property. In both of these comparable property sales, the lack of road access makes these properties inferior. It is logical that the Subject Property would have a greater value per acre.

CONCLUSION

15In conclusion, the evidence presented confirmed that the current value for 2018 and 2019 of the Subject Property is $19,500.