Donald Wilfred Brosseau v. Municipal Property Assessment Corporation, 2019 CanLII 117375

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: December 06, 2019

FILE NO.: WR 162742

Assessed Person(s): Donald Wilfred Brosseau

Appellant(s): Donald Wilfred Brosseau

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 32

Respondent(s): Superior-Greenstone District Locality Education

Property Location(s): 37 Mountain Bay Drive

Municipality(ies): Superior-Greenstone District Locality Education

Roll Number(s): 5811-010-001-05400-0000

Appeal Number(s): 3374359

Taxation Year(s): 2019

Hearing Event No.: 725779

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

Heard: November 5, 2019 by telephone conference call

APPEARANCES:

Parties

Representative

Donald Brosseau

Self-represented

MPAC

Glenn Spiess

Superior-Greenstone District Locality Education

No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

OVERVIEW

1Donald Brosseau (the ‘Appellant”) is the owner of 37 Mountain Bay Drive (the “Subject Property”), in the unorganized territory of Superior-Greenstone District Locality Education. The residence is a single family detached home. Mr. Brosseau has filed an appeal for the 2019 taxation year assessment.

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 of January 1, 2016.

3MPAC has returned an assessment of $473,000 for the 2019 taxation year.

4It is the Appellant’s position that MPAC’s assessed value is too high and that a fair assessment is $340,000. MPAC took the position at the hearing that the correct current value is $408,000.

5Pursuant to s. 40(11) of the Act, Superior-Greenstone is a party to this proceeding, but it did not advise this Board of its position on the issues 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. At the hearing MPAC took the position that an equitable reduction of the current value is required due to a level of assessment study.

7At the completion of the hearing, I reserved my decision. For the reasons that follow, I find that the current value of the Subject Property is $347,000 for the 2019 taxation year. I also find that an equitable adjustment to $329,000 is required, pursuant to s. 44(3)(b) of the Act.

Relevant Legislation and Rules

8The 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:

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

9The issues to be determined on this appeal are:

1. The correct current value of the Subject Property for the 2019 taxation year; 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

What is the correct current value of the Subject Property for the 2019 taxation year?

10This is a waterfront property on the north shore of Lake Superior between Nipigon and Terrace Bay. The property is improved with a single storey, detached home measuring 1,543 square feet (“sq. ft.”). MPAC considers it to be built in 2014. However, both parties agree that the interior is partially unfinished; some walls are not finished, and it requires some interior doors and trim. It has one and one-half bathrooms, two fireplaces and it is heated by forced air. There is no basement, garage or other outbuildings. The quality of the construction of the residence, as ranked by MPAC, is 6.5 out of 10. MPAC submits that this ranking reflects the quality of construction but not the fact that it is unfinished. The lot has an effective area of 1.43 acres.

MPAC’s Evidence

11Glenn Spiess represented MPAC and gave evidence in support of the assessment corporation. He entered into evidence a valuation report in support of the current value.

12He testified that the Subject Property’s assessment was initially $473,000. Mr. Spiess stated that the building portion alone was reduced by 9% to reflect its unfinished state, and that the land and building was reduced by a further 17% for a ‘market adjustment’. The resulting value of $408,000 is his recommended current value.

13In support of the recommended value, Mr. Spiess submitted six waterfront sales, all located on Mountain Bay Drive, which took place in 2013, 2014, 2015, 2016 and 2017. These sales are summarized in Appendix A.

14Mr. Spiess time adjusted the sale prices to estimate the selling price as of the January 1, 2016 valuation day; those values range from $146,700 to $570,600. See Appendix A for details of these properties.

15In order to time adjust the sale values Mr. Spiess carried out a Sales Ratio Trend Analysis study to create time-adjustment factors (“TAF”). These factors were derived from 582 sales of vacant or improved lands occurring from January 2012 to December 2017. Mr. Brosseau did not challenge the TAFs.

MPAC’s Submissions

16Mr. Spiess used a bracketing method to support his recommended value of $408,000.

17He took the position that his Sale 1, with roll number 5811-010-0010-5600-000, which is also known as “Lot 39”, is the most comparable of his sales to the Subject Property. It is located very near the Subject Property and the residence is a single storey with forced air heating. He argues that the differences between it and the Subject Property cancel each other out. It has a smaller lot size, an older residence with a slightly lower quality of construction but its superior features are that it has two full bathrooms, air conditioning, a larger building area and a garage. Mr. Spiess argues that its time adjusted sale price of $402,570 supports his recommended assessment of $408,000.

18Mr. Spiess reviewed the remaining five sales, indicating that, in his opinion, Sales 2, 3, 5 and 6 are inferior to the Subject Property and that Sale 4 is superior to the Subject Property.

19In response to the Appellant’s proposed comparable of 29 Mountain Bay Drive, also known as Lot 29, Mr. Spiess argued that this property is inferior to the Subject Property and the sale date of September 2018 is too far from the January 1, 2016 valuation day to be relevant.

20With respect to the Appellant’s argument that the Subject Property, in its unfinished state, is similar to Lot 29 and MPAC’s Sale 2, 11 Mountain Bay Drive, Mr. Spiess argued that the Subject Property has a superior level of construction and that the unfinished state is more accurately reflected by the 9% reduction. He argued that the quality of construction and state of completion are two separate considerations.

Appellant’s Evidence

21Mr. Brosseau represented himself. He testified that during a Request for Reconsideration process for a previous taxation year he agreed to a reduced assessment of $422,000. He felt he had to agree to that amount because, at that time, Mr. Spiess told him there were no comparable property sales in the area.

22When a neighbouring property, 29 Mountain Bay Drive, sold in 2018 Mr. Brosseau felt it could be used to determine a fair assessment for his property. It sold in September 2018 for $270,000 and was assessed at $340,000. Like the Subject Property, it is located on Lake Superior and on the same street, the residence is a single storey and is heated by forced air. It is superior to the Subject Property in lot size, at 1.58 acres, it has two full bathrooms and a two-car garage. Mr. Brosseau does not believe the age of the residence, having been built in 1996, or the slightly smaller building area of 1,420 sq. ft. is impactful on value. On cross-examination Mr. Brosseau acknowledged that 29 Mountain Bay Drive is a modular home which is inferior to his home’s construction.

Appellant’s Submissions

23Mr. Brosseau argued that he is seeking a fair assessment which he feels was not afforded to him in the past.

24Relying on his evidence, Mr. Brosseau argued that a fair assessment for the 2019 taxation year should be equal to or less than $340,000, which is the assessed value of 29 Mountain Bay Drive. He argued that the inferior and superior factors of 29 Mountain Bay Drive cancel each other out and that, on balance, it is comparable to the Subject Property.

25Mr. Brosseau argued that MPAC’s Sale 1, Lot 39, is superior to the Subject Property because it is grander inside and the exterior photos submitted by MPAC show that it is well maintained and attractive.

26He also argued that his property is more similar to inferior properties because of its unfinished state.

Findings on Current Value

27The best evidence of the current value of a residential property is an arm’s length sale of that property on or near the valuation day. When that evidence is not available, arm’s length sales of similar properties on or near the valuation day are the next best evidence.

28At the hearing there was some discussion about sale dates in relation to the valuation day of January 1, 2016. Usually, it is preferred to find sales of similar properties occurring as close to the valuation day as possible. Typically, preferred sales occur in the ‘shoulder years’ of the valuation day which in this case would be 2015 and 2016. This is because those sales better reflect the market as it existed on the valuation day and require less adjustments to reflect the estimated value as of the valuation day. Sales close to the valuation day are also important in markets where prices fluctuate quickly. However, sales occurring farther from the valuation day are acceptable where there are few comparable sales in an area and where the market is relatively stable over time. Based on MPAC’s data, both of these factors appear to be present in the Superior-Greenstone area. MPAC presented sales from 2013 to 2017 and the Appellant presented a sale from 2018, all of which are acceptable in terms of distance in time from the valuation day in this particular market location.

29MPAC provided a bracketing analysis, comparing each sale property to the Subject Property in terms of inferiority, superiority and similarity. Bracketing, or rating the sale properties as inferior, superior or similar to the Subject Property, is a good method of creating a probable range of likely sale values. I will use that method to determine the likely sale value of the Subject Property.

30MPAC has recommended a value of $408,000 which reflects two adjustments. One is a market adjustment applied to the land and building and the other is an adjustment applied to the building alone to reflect its unfinished state. I am not concerned with the market adjustment because all of the sale properties are located in the same market as the Subject Property; their sale prices will reflect the market values. There is no dispute that the Subject Property is in an unfinished state. However, unlike MPAC, I have insufficient data to determine the value of the building separate from the land. Instead, I will consider its unfinished state when comparing the Subject Property to the sale properties.

31MPAC’s Sale 1, Lot 39, sold in May 2013 for $355,000 and has a time adjusted sale price of $402,570. Compared to the Subject Property it has a smaller lot, an older home and it has a slightly lower quality of construction. However, the residence is slightly larger. It is directly similar in that it has a single storey home. The Appellant argued that the interior is superior to the subject property. However, on balance, I find that this property is comparable to the Subject Property.

32MPAC’s Sale 2, 11 Mountain Bay Drive, sold in July 2015 for $340,000 and has a time adjusted sale price of $346,800. Compared to the Subject Property it has a smaller lot, an older and smaller home with a slightly lower quality of construction and only one bathroom. Mr. Spiess submitted that its electric heating is inferior to the Subject Property’s forced air heating. Unlike the Subject Property it has two outbuildings, a 117 sq. ft. cabana and a 280 sq. ft. cabin. On balance I find that this property is comparable to the Subject Property.

33MPAC’s Sale 3, known only by its roll number 5811-010-000-05000-0000, sold in May 2014 for $399,000 and has a time adjusted sale price of $364,764. Compared to the Subject Property is has an older and smaller home, a lower quality of construction and a slightly smaller lot. Unlike the Subject Property, the home is one-and-three-quarter storeys. On balance, I find that this property is inferior to the Subject Property.

34MPAC’s Sale 4, 36 Mountain Bay Drive, sold in April 2017 for $600,000 and has a time-adjusted sale price of $570,600. It is superior to the Subject Property in building size and quality of construction and it has three additional buildings: two detached garages and a pool house. It is superior to the Subject Property.

35MPAC’s Sales 5 and 6 located at 9 and 18 Mountain Bay Road respectively, are inferior to the Subject Properties in age, building and lot sizes and their sale values of $180,000 and $150,000 reflect this.

36The Appellant’s Sale, 29 Mountain Bay Drive, sold in September 2018 for $270,000. MPAC’s time adjustments covered the period of January 2012 to December 2017. No time adjustments were presented for 2018. The time adjustment factor closest to the sale was 0.932 for December 2017. Applying this factor to the sale results in a value of $251,640. This property is comparable to the Subject in its location and because it has a single storey residence. The building is older and slightly smaller and has a poorer quality of construction however it has a larger lot, two full bathrooms and a garage. I find that this property is, on balance, comparable to the Subject Property.

37Based on the above, I find that the Subject Property would likely sell in the range of the comparable properties. The median sale price of the three most comparable properties is $346,800. Therefore, I find that the current value of the Subject Property is $347,000, rounded.

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

38Mr. Brosseau took the position that MPAC is not assessing property accurately in the vicinity and provided the example of 29 Mountain Bay Drive which he argued is similar to his property. It was assessed at a value of $340,000 while his property was assessed at $473,000.

MPAC’s Evidence

39Mr. Spiess presented an equity study of 30 waterfront sales of single family detached and seasonal/recreational properties which occurred from January 2012 to December 2016. He provided no other descriptive details about these properties other than a locational map. The median assessment to sale ratio (“ASR”) is 0.947 and the coefficient of dispersion is 22.8.

40MPAC takes the position that an ASR between 0.95 to 1.05 indicates “that equity is achieved” and that a coefficient of dispersion for recreational waterfront should not be more than 20. Relying on its evidence, MPAC’s submits that an equitable reduction of the current value is required.

Findings on Equity

41The 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.

42Clause 44(3)(b) of the Act provides that, in determining whether an adjustment of the current value is required to make it equitable, I must “have reference to the value at which similar lands in the vicinity are assessed.” The word ‘similar’ is not defined in the Act.

43In Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299, the Divisional Court contemplated the meaning of ‘similar lands’ in relation to clause 44(3)(b) of the Act. Referencing Trizec Equities Ltd v Ontario (Regional Assessment Commissioner, Region No 27), [1988] OJ No 182, 27 OAC 203, 37 MPLR 175, 8 ACWS (3d) 399 (Div. Ct.) (“Trizec”) it found, at paragraph 25, that “the proper approach to be taken to determining what are “similar lands in the vicinity” is that set out by Saunders J. in Trizec, that is, that all points of comparison must be considered.” In Trizec the court also determined that “The board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.”

44In this case, the only points of similarity are the general location, waterfront and use. In this instance, I find that these points are sufficient.

45I find that MPAC’s evidence is the best evidence before me because the analysis is based on 30 properties, which will reflect a general trend. MPAC utilized a level of assessment analysis, comparing assessments to time adjusted sale values. The resulting ASRs provide an indication of whether an equitable adjustment of the current value is required. The median ASR of the 30 properties is 0.947. MPAC agrees that, as this median value is less than 0.95, and equitable reduction is warranted. Applying the median ASR of 0.947 to the current value of $347,000 results in a value of $328,609 or $329,000, rounded.

46Based on the above analysis, I find that an 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 from $346,800 to an equitable value of $329,000 for the 2019 taxation year.

DECISION

47The current value of the Subject Property is $347,000 for the 2019 taxation year.

48An equitable reduction of the current value, pursuant to s. 44(3)(b) of the Act, is required. Accordingly, the assessment as returned is reduced from $473,000 to $329,000 for the 2019 taxation year.