2251210 Ontario Inc. v. Municipal Property Assessment Corporation, 2019 CanLII 1218

Assessment Review Board

Issue Date: January 09, 2019 File No.: WR 153244

Assessed Person(s): 2251210 Ontario Inc. Appellant(s): 2251210 Ontario Inc. Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 28 Respondent(s): Township of the Archipelago

Property Location(s): 1 A233 Island Municipality(ies): Township of the Archipelago Roll Number(s): 4905-140-010-08700-0000 Appeal Number(s): 3254855 and 3314115 Taxation Year(s): 2017 and 2018 Hearing Event No.: 697373

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

Heard: May 9, 2018 in Parry Sound, Ontario

Appearances

Parties	Representative
2251210 Ontario Inc.	Jaroslaw Wowk
MPAC	Darrin Maclean
Township of Archipelago	No one appeared

Decision of the Board Delivered by Dan Weagant

Introduction

1The subject property, 1 A233 Island, is an island located in the west portion of Georgian Bay. It comprises 1.48 acres of land. It has no municipal services and is accessed solely by boat. It is located in an area of islands of various sizes. The subject property is improved with three buildings; a cabin structure with rudimentary facilities for cooking, and two storage sheds.

2For the 2017 taxation year, the property was assessed at $839,000. 2251210 Ontario Inc., (“the Appellant”) believes this value is too high and filed an appeal as a result.

3As a result of a Request for Reconsideration filed by the Appellant prior to the hearing, MPAC reviewed the subject property in greater detail and provided a reduced value as a recommended value for settlement with the Appellant of $718,000. This recommended value was rejected by the Appellant.

4The Assessment Review Board (the “Board”) must decide two things in these appeals. Firstly, the current value of the subject property must be determined. Having reference to the assessments of similar properties in the vicinity, the Board must also determine if the current value found needs to be reduced for the purpose of achieving equitable assessment.

Decision

5The Board finds the current value of the subject property is $509,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

6Accordingly, the assessment of 1 A233 Island for the 2017 and 2018 taxation years is reduced from $839,000 to $509,000, in the Residential property class.

Legislation

7In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”).

8Section 1 of the Act states:

“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.

9Section 19.(1) of the Act states:

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

10Section 44.(3) of the Act states:

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.

What is the Current Value of the Subject Property?

MPAC’s Evidence and Position

11MPAC applied the Direct Comparison approach to value, whereby the characteristics of comparable properties are used to make adjustments to their sale values to arrive at a likely sale value for the subject property under appeal. In this case MPAC considered the sales of six properties in the area that they deemed to be suitably comparable to the subject property for the purpose of determining its current value, effective on the January 1, 2016 valuation day.

12MPAC’s Property Valuation Analyst testified that the six comparable properties were selected for the study, with the following criteria:

• Sale dates in proximity of the valuation day;
• Located in the same ‘E-35’ neighbourhood (with the exception of comparable 6);
• Similar quality class as the subject property;
• Similarity of dwelling size and island size when compared to the subject property.

13MPAC submitted that five of the six properties were clearly superior to the subject property and that one property was inferior to the subject property. The single inferior property identified by MPAC (MPAC 3) had a Time Adjusted Sale (“TAS”) price of $721,000 (rounded). MPAC 3 is a smaller (0.5 acre) island with a slightly smaller main building with a quality code of 5. It has no secondary structures.

14The lowest valued ‘superior’ property in MPAC’s sample (MPAC 1) has a land area of 1.09 acres, a much larger main dwelling with a quality code of 6 and three secondary structures including a cabin, boat port, and a storage shed. The TAS value of MPAC 1 is $960,000, rounded.

15MPAC submitted that the differences in value between these two properties indicates the range where the current value of the subject property would reasonably lie. This range includes the returned value of the subject property of $839,000 which falls on the midpoint between the TAS values of MPAC 3 and MPAC 1.

16MPAC submitted that the value of the subject property was reviewed after the roll return date, because of the assigned quality rating. All of the properties in MPAC’s comparison have quality ratings of 6 or 7, whereas the subject property’s quality rating is 4.0. As a result, MPAC revised the value in preparation for the hearing. It reduced the value by approximately 15%, to $718,000; slightly below the lowest TAS value in its sample, to account for the disparity in quality ratings between the subject property and MPAC’s six comparable properties.

Appellant’s Evidence and Position

17The Appellant submitted that MPAC’s evidence was not determinative of the current value of the subject property. He submitted that the properties in MPAC’s sample were not suitable comparable to the subject property in the following ways:

• The quality codes for the six comparables are all above the code of 4.0 applied to the subject property;
• Ages of the comparable properties in MPAC’s sample were all much newer.

18The Appellant also submitted that MPAC’s findings in its Property Assessment Detail showed adjustments for characteristics that do not apply:

• West exposure (he submits the exposure in north);
• The lot is indicated as being ‘good’ whereas it should be ‘poor’ because it is low lying;
• The lot is valued as though it has a ‘panoramic view’ which is not the case as views from the subject island are obstructed in all directions.

19The best evidence of current value for the subject property according to the Appellant is its comparison to four properties that sold in the area that have more comparable characteristics than the properties used by MPAC.

20These four properties sold for an average of $478,000, rounded. They had sale dates in 2014, 2015 or 2017, with an average site area of 1.44 acres. The average year built of the four is 1949, with an average cottage or cabin size of 856 square feet. All of these averages, according to the Appellant are remarkably similar to the subject property.

21The major comparative element of these four properties is the quality rating. They are all rated as 4.0, the same as the subject property. The Appellant summarized by pointing out the differences in MPAC’s sample and the similarities in his sample, suggesting that the sample he used was superior for the purpose of determining the current value of the subject property through the direct comparison approach.

Board’s Analysis

22The Act defines current value as the amount a property would sell for on the valuation day. This means the Board must determine current value based on sales. When a sale of the subject property has not occurred on or near the valuation day, the sales of other properties that are comparable to the subject property may be used to determine a reasonable value of the subject property by making adjustments to variables between those comparable properties and the subject property.

23The Board agrees with both parties that the current value of the subject property is below the value returned of $839,000. MPAC submitted that the quality code of 4.0 required a revision when the current value of the subject property was compared to the six properties in its comparison. This reduction amounted to a reduction of approximately 15%, to $718,000.

24MPAC also applied valuation variables to the subject property that the Appellant took issue with:

• direction of exposure;
• panoramic view;
• quality of the island itself.

25The Board disregards these distinctions as meaningful adjustments to current value. They are measures taken by MPAC in their mass appraisal approach to value in an effort to make sense of what is nearly an endless list of differences that could apply when a comparison is made between one property and another. This is an assessment tool. By contrast, the task for the Board is to determine the current value and that is always best determined through the use of sales. In order for sales information to be used for the purpose, the comparable properties have to be 1) comparable; and 2) have a sale value attached.

26The Board finds that the best comparable property to the subject property is 1 B 867 Island (Appellant 2). It is the only property in evidence with common features when compared to the subject property. Appellant 2 is a slightly smaller island, but the dwelling is within 24 square feet in size of the subject property and was built 20 years later. The year built and marginal island size difference serve to balance one another. No other property in evidence provides for such a narrow comparison. Both Appellant 2 and the subject property have a quality code of 4.0 and neither has central heat.

27Appellant 2 has a TAS value of $509,000. Accounting for the small differences between it and the subject property, the Board finds this to be the best indication of the current value of the subject property in evidence.

Is a Reduction in the Current Value Necessary to Achieve Equitable Assessment When Reference is Made to the Assessments of Similar Properties in the Vicinity?

28The Appellant did not make a specific submission on the question of equity of assessment at the subject property’s current value.

29MPAC submitted an Equity Analysis that compared the assessments of 30 single-family waterfront dwellings in the vicinity of the subject property. This relationship is called the Assessment to Sale Ratio (“ASR”). The ASR is a common method used by MPAC to decide if an adjustment in the current value determined is necessary for the resulting assessment to be considered equitable with the assessments of similar lands in the vicinity.

30The range of ASRs in the sample was from 0.836 to 1.373 with a median of 1.00. The Equity Analysis goes on to explain that MPAC considers median ASRs of similar properties in the vicinity that fall within a range of 0.95 to 1.05, to indicate equity of assessment. The Analysis also noted that the range determined by the International Association of Assessing Officers’ (“IAAO”) to indicate equity in assessment is a median ASR of between 0.90 to 1.10.

31MPAC therefore submitted that no adjustment for equity was required in this case.

32The Appellant did not refute the findings of MPAC’s Equity Analysis.

Board’s Analysis

33The concept of reducing the current value determined to make the subject property’s assessment equitable with that of similar properties in the vicinity requires the Board to change a correct assessment finding to one that is incorrect to make it fair and equitable. Adjustments for this purpose cannot therefore be made without compelling evidence to do so.

34The Appellant, who has the burden of proof on the equity of assessment question, made no submission. MPAC’s Equity Analysis indicates that, in accordance with standards set by the IAAO and MPAC, similar properties in the vicinity to the subject property are being assessed at a level close to their sale values and that no downward adjustment to the current value determined is necessary for the purposes of equitable or fair assessment.

35The Board finds that the Equity Analysis prepared by MPAC is the best evidence of whether or not the current value determined requires a reduction to be equitable and fair. The Board finds that no adjustment is required in this case.

Conclusion

36The Board finds the current value of the subject property is $509,000. There is no evidence to support a reduction in this amount for the purposes of equitable assessment.

37Accordingly, the assessment of 1 A233 Island for the 2017 and 2018 taxation years is reduced from $839,000 to $509,000, in the Residential property class.