Township of Johnson v. Municipal Property Assessment Corporation, 2019 CanLII 122822

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

ISSUE DATE: December 24, 2019

FILE NO.: WR 162547

Assessed Person(s): Isaak Penner Doerksen and Manassah Martin Doerksen

Appellant(s): Township of Johnson

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 31

Respondent(s): Isaak Penner Doerksen and Manassah Martin Doerksen

Property Location(s): 1063 Gordon Lake Road

Municipality(ies): Township of Johnson

Roll Number(s): 5716-000-002-04302-0000

Appeal Number(s): 3373363, 3373366, 3373365, 3373364, 3343576 and 3380874

Taxation Year(s): 2018 and 2019

Hearing Event No.: 725630

Legislative Authority: Sections 32, 33, 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: October 16, 2019 in Desbarats, Ontario

APPEARANCES:

Parties	Representative
Isaak Penner Doerksen and Manassah Martin Doerksen	Self-represented
MPAC	Pierre Lefebvre
Township of Johnson	Herman Klingenberg

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1For the 2019 taxation year, the Township of Johnson (the “Township”) appealed the current value assessment applied by MPAC to the subject property at 1063 Gordon Lake Road. The reason for the appeal was that, in the Township’s view, the assessment was too low and did not adequately reflect the correct assessment when the ongoing industrial activity on the property is considered.

2The subject property is identified as a farm property used for farm purposes. The Township alleges that industrial activity was also being carried out on the property in 2018 and that the value returned by MPAC did not consider this use. In addition, the Township further alleges that the property is incorrectly classified as a farm property and that the industrial activity occurring on the property is the primary use. The Township believes the correct current value after the appropriate amendments to the subject property should be $272,000, apportioned as follows:

• In the Residential property class: $78,815; and
• In the Industrial property class: $193,185.

3In response to the Township’s appeal of the 2019 returned assessment, MPAC amended its valuation by applying two omitted assessments with effective dates of January 01, 2018 ($24,000 added value to reflect a commercial structure), January 1, 2019 ($24,000 added to reflect a commercial structure) and supplementary assessment with January 1, 2019 ($16,000 added to reflect an Industrial structure). In addition, MPAC applied a correction to the assessment, effective January 1, 2019 to change the classification on part of the property from farm to Industrial.

4The purpose of these omitted and supplementary assessments was to recognize changes to the property since its last inspection and to add the Industrial property class to portions of the property in 2018 and 2019, with corresponding amendments in the areas used for farm purposes and commercial uses. MPAC believes the resulting current value of the subject property, effective August 31, 2018 is $151,000, apportioned as follows:

• In the Residential property class: $47,500;
• In the Farm property class: $83,500; and
• In the Commercial property class: $20,000.

5MPAC believes the resulting current value of the subject property, effective January 1, 2019 is $167,000, apportioned as follows:

• In the Residential property class: $47,500;
• In the Farm property class: $14,400;
• In the Commercial property Class: $20,000; and
• In the Industrial property class: $85,100.

6The assessed persons (the “Assessed”) acknowledged that uses occurred on the property that could be considered Industrial in nature. In particular, the Assessed testified that one of the buildings on the property was used to store and sell cut lumber, using materials obtained from elsewhere and the use of the lumber to manufacture wood consumer products.

The Issues

7The Assessment Review Board (the “Board”) must decide several things in these appeals:

• Firstly, the Board must determine the current value of the property for the 2018 and 2019 taxation years;
• Secondly, the Board must determine the correct property classes applicable to the subject property;
• Thirdly, the Board must determine the apportionment of value among the classifications represented at the subject property; and
• Lastly, once the current value is determined, the Board must then determine if the current value needs to be reduced for the purpose of equitable assessment.

Where the Parties Agree

8There is no dispute among the Parties regarding the industrial use of the property. They agree that one of the buildings on the property is used for industrial purposes, and that a portion of the land (nominally applied as one acre) supports that industrial use.

9There is no dispute among the Parties with respect to the effective dates set out by MPAC for the Industrial use in its omitted and supplementary assessments.

DECISION

10The Board finds the current value of the subject property is $131,000. The Board also finds that there is no evidence to support a reduction in this value for it to be considered equitable when reference is made to the assessments of similar properties in the vicinity.

11In making this decision, the Board finds as follows:

• Appeal # 3343576, effective date January 1, 2019 returned value of $131,000 is confirmed and apportioned as follows: In the Residential property class: $47,500; in the Farm property class: $82,500; in the Industrial property class: $1,000.
• Appeal # 3373363, effective date January 1, 2018 addition of omitted commercial use is reduced from $24,000 to $0.
• Appeal # 3373364, effective date January 1, 2019 addition of omitted commercial use is reduced from $24,000 to $0.
• Appeal # 3373366, effective date January 1, 2019 addition of supplementary industrial use is reduced from $16,000 to $0.
• Appeal # 3373365, effective date January 1, 2019 addition of supplementary change from Farm property class to Industrial property class is reduced from $69,100 to $1,000.
• Appeal # 3380874, effective date February 28, 2019 correction of apportionment is amended as follows: in the Residential property class $47,500; in the Farm property class $82,500; in the Commercial property class $0; and in the Industrial property class, $1,000.

12Accordingly, the assessment of the subject property as of August 31, 2018, reflective of the omitted assessment applied by MPAC to include the Industrial use, is $131,000, apportioned as follows:

• In the Residential property class: $47,500
• In the Farm property class: $82,500
• In the Industrial property class: $1,000

13The assessment of the subject property for the 2019 taxation year is $131,000, apportioned as follows:

• In the Residential property class: $47,500
• In the Farm property class: $82,500
• In the Industrial property class: $1,000.

LEGISLATION

14In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”).

15Section 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.

16Section 19.(1) of the Act states:

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

17Section 32 of the Act states:

Correction of errors, etc., in assessment roll

32 (1) Despite the delivery of any notice provided for under this Act, the assessment corporation at any time before the time fixed for the return of the assessment roll may correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly. 2008, c. 7, Sched. A, s. 6; 2008, c. 19, Sched. A, s. 5 (1).

Same, factual error only

(1.1) Despite the delivery of any notice provided for under this Act, for 2009 and subsequent taxation years, the assessment corporation may, at any time during the taxation year, correct any error in the assessment or classification of a property that has resulted from incorrect factual information about the property, and not from a change in opinion as to current value, and the following rules apply:

1. If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the correction, and the municipality shall,

i. refund or credit to the owner the amount of any overpayment of taxes and any interest paid by the owner on the amount of the overpayment, or

ii. levy and collect from the owner any additional taxes that have become payable as a result of the correction.

2. If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the correction, and shall,

i. refund or credit to the owner the amount of any overpayment of taxes and any interest paid by the owner on the amount of the overpayment, or

ii. levy and collect from the owner any additional taxes that have become payable as a result of the correction. 2008, c. 7, Sched. A, s. 6; 2008, c. 19, Sched. A, s. 5 (2).

Change in classification

(2) The following rules apply if, as a result of a change in the regulations made under this Act or the Education Act, the classification of land is changed and taxes have been levied on the land that exceed the amount of taxes that would have been levied on the land if it had been classified in accordance with the change in the regulations:

1. The assessment corporation shall make any assessment necessary to change the classification.

2. If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall refund or credit to the owner the amount of any overpayment and any interest paid by the owner on the amount of the overpayment.

3. If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall refund or credit to the owner the amount of any overpayment and any interest paid by the owner on the amount of the overpayment. 2006, c. 33, Sched. A, s. 22; 2008, c. 19, Sched. A, s. 5 (3).

Change in tax liability

(3) The following rules apply if, as a result of an amendment to this Act or the regulations, land becomes exempt from taxation:

1. The assessment corporation shall make any assessment necessary to change the tax liability for the land.

2. If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall refund or credit to the owner the amount of any overpayment of taxes and any interest paid by the owner on the amount of the overpayment.

3. If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall refund or credit to the owner the amount of any overpayment of taxes and any interest paid by the owner on the amount of the overpayment. 2006, c. 33, Sched. A, s. 22; 2008, c. 19, Sched. A, s. 5 (4).

Change in methodology

(4) The following rules apply if, as a result of an amendment to this Act or the regulations, the method of determining the assessed value of land is changed:

1. The assessment corporation shall make any assessment necessary to change the assessed value.

2. If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall,

i. refund or credit to the owner the amount of any overpayment of taxes and any interest paid by the owner on the amount of the overpayment, or

ii. levy and collect from the owner any additional taxes that have become payable as a result of the change.

3. If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall,

i. refund or credit to the owner the amount of any overpayment of taxes and any interest paid by the owner on the amount of the overpayment, or

ii. collect from the owner any additional taxes that have become payable as a result of the change. 2006, c. 33, Sched. A, s. 22; 2008, c. 19, Sched. A, s. 5 (5).

(5) Repealed: 2008, c. 19, Sched. A, s. 5 (6).

18Section 33 of the Act states:

Change re land omitted from tax roll

33 (1) The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted:

1. The assessment corporation shall make any assessment necessary to correct the omission.

2. If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall levy and collect the taxes that would have been payable if the assessment had not been omitted.

3. If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall collect the taxes that would have been payable if the assessment had not been omitted. 2006, c. 33, Sched. A, s. 23 (1).

Exceptions

(1.1) Subsection (1) does not apply with respect to such land, during such period and in such circumstances as the Minister may prescribe. 2002, c. 22, s. 6.

Definition

(2) For the purposes of this section,

“omitted” includes the invalidation or setting aside of an assessment by any court or assessment tribunal on any ground except that the land is not liable to taxation. R.S.O. 1990, c. A.31, s. 33 (2).

Change re incorrect exemption from tax

(3) The following rules apply if land liable to taxation has been entered on the tax roll for the current year or for all or part of either or both of the last two preceding years as exempt from taxation, and no taxes have been levied on that land:

1. The assessment corporation shall make any assessment necessary to correct the omission. However, no change shall be made if a court or tribunal has decided that the land is not liable to taxation.

2. If the land is in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall levy and collect the taxes that would have been payable if the land had been entered in the tax roll as being liable to taxation.

3. If the land is in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall collect the taxes that would have been payable if the land had been entered in the tax roll as being liable to taxation. 2006, c. 33, Sched. A, s. 23 (2).

Managed forests, conservation land

(4) Subsection (5) applies with respect to,

(a) land in the managed forests property class;

(b) land that is conservation land for the purposes of paragraph 25 of subsection 3 (1).

(c) Repealed: 2005, c. 28, Sched. A, s. 3.

1997, c. 29, s. 17; 2005, c. 28, Sched. A, s. 3.

Reassessment re managed forests, conservation land

(5) The following rules apply if land described in clause (4) (a) or (b) ceases to be described by any of those clauses:

1. The assessment corporation shall make any change to the assessment and classification required as a result. However, any change to the assessment and classification shall not affect a taxation year that ends more than four years before the assessment and classification is made.

2. If the land is in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall levy and collect the taxes payable for the years affected by the change.

3. If the land is in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall collect the taxes payable for the years affected by the change. 2006, c. 33, Sched. A, s. 23 (3).

Changes to next assessment roll

(6) If the assessment corporation makes an assessment or classification under this section, the appropriate changes shall be made on the assessment roll for the next year, even if the day as of which land is valued for the next year is the same as for the current year. 1998, c. 3, s. 7; 2006, c. 33, Sched. A, s. 23 (4).

19Section 34 of the Act states:

Supplementary assessments to be added to tax roll

34 (1) If, after notices of assessment have been given under section 31 and before the last day of the taxation year for which taxes are levied on the assessment referred to in the notices,

(a) an increase in value occurs which results from the erection, alteration, enlargement or improvement of any building, structure, machinery, equipment or fixture or any portion thereof that commences to be used for any purpose;

(b) land or a portion of land ceases,

(i) to be exempt from taxation,

(ii) to be farm lands the current value of which is determined in accordance with subsection 19 (5),

(iii) to be conservation land the current value of which is determined under subsection 19 (5.2),

(iii.1) to be land in the managed forests property class the current value of which is determined under subsection 19 (5.2) or (5.2.1),

(iv) to be land the current value of which is based on current use under regulations made under subsection 19 (2), or

(v) to be classified in a subclass of real property;

(c) Repealed: 1997, c. 5, s. 22 (1).

(d) a pipeline increases in value because it ceases to be entitled to the reduction provided for in subsection 25 (9),

the assessor may make the further assessment that may be necessary to reflect the change, and upon receiving notice of the further assessment, the clerk of the municipality or, in the case of land in non-municipal territory, the Minister shall enter a supplementary assessment on the tax roll and the amount of taxes to be levied thereon shall be the amount of taxes that would have been levied for the portion of the taxation year left remaining after the change occurred if the assessment had been made in the usual way. R.S.O. 1990, c. A.31, s. 34; 1997, c. 5, s. 22 (1); 1997, c. 29, s. 18 (1); 1998, c. 3, s. 8 (1); 2002, c. 17, Sched. F, Table; 2005, c. 28, Sched. A, s. 4; 2006, c. 33, Sched. A, s. 24 (1).

Supplementary classification

(2) If, during the taxation year or the period after June 30 in the preceding taxation year, a change event, within the meaning of subsection (2.2), occurs that would change the class or subclass of real property that a parcel of land or a part of such a parcel is in, the assessor may change the classification accordingly, and, upon receiving notice of the change, the clerk of the municipality or, in the case of land in non-municipal territory, the Minister, shall enter it on the tax roll and the tax levied for the taxation year shall be determined in accordance with the new classification. 2018, c. 8, Sched. 1, s. 8 (1).

Limitations

(2.1) The following apply with respect to subsection (2):

1. Subsection (2) does not affect the tax levied for the taxation year in respect of a part of the taxation year preceding the change event.

2. Paragraph 1 does not apply to a change event described in clause (c) of the definition of “change event” in subsection (2.2).

3. Repealed: 2000, c. 25, s. 9.

1998, c. 3, s. 8 (2); 2000, c. 25, s. 9.

“change event”

(2.2) For the purposes of subsections (2) and (2.1),

“change event” includes,

(a) a change in the use of all or part of the parcel of land,

(b) an act or omission that results in all or part of the parcel of land ceasing to be in a class or subclass of real property, and

(c) the opting, by a council of a single or upper tier municipality, to have a class or subclass of real property apply or cease to apply within the municipality. 1998, c. 3, s. 8 (2); 2002, c. 17, Sched. F, Table; 2018, c. 8, Sched. 1, s. 8 (2).

(2.3) Repealed: 2006, c. 33, Sched. A, s. 24 (3).

Re-classification

(3) If subclause (1) (b) (ii) or (v) apply with respect to land or a portion of land, the assessment corporation, in addition to making a further assessment, may also change the classification of the land. 1997, c. 29, s. 18 (2); 2006, c. 33, Sched. A, s. 24 (4).

Changes to next assessment roll

(4) If the assessment corporation makes an assessment or classification under this section, or could have done so but did not, the appropriate changes shall be made on the assessment roll for the next year, even if the day as of which land is valued for the next year is the same as for the current year. 1998, c. 3, s. 8 (3); 2006, c. 33, Sched. A, s. 24 (5).

20Section 40(17) of the Act states:

Appeal to Assessment Review Board

Burden of proof

(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. 2008, c. 7, Sched. A, s. 11.

21Section 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 assesses 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 Case

22MPAC submitted a valuation report that included two methods of determining the current value of the subject property. The primary means of making this determination was a cost approach analysis where MPAC took the value of the improvements and buildings and added those values to the cost of the land. Once the cost approach calculations were made, and the various omitted and supplementary assessments were added to the values determined, MPAC also undertook a direct comparison approach analysis.

23This second analysis was a secondary measure carried out to test the results of the cost approach analysis. MPAC’s cost approach result was compared to the time adjusted sale values of six farm properties that sold in the Algoma District from April 2012 to November 2015. These six farms sold for between $225,000 and $575,000, with time adjusted sale values of between $235,674 and $581,073.

The Cost Approach

24MPAC applied a total land value to the property of $78,524 and apportioned this amount as follows:

• In the Residential property class: $1,413
• In the Farm property class: $76,565
• In the Industrial property class: $546

25To arrive at a value for the buildings on the property, MPAC applied the MPAC Agricultural Cost Guide and the Residential Cost Manual. These costs guides were selected over the ‘Hanscomb cost guide’ (‘Hanscomb’) because, in the view of the Assessor, the buildings on the property are either residential or farm buildings. Hanscomb is used for commercial and industrial buildings and although it was acknowledged by MPAC that one of the buildings on the property was being used for industrial purposes, the Assessor selected the Agricultural Cost Guide because the chief activity on the property is agriculture and the buildings reflect that type of use.

26The Assessor presented his findings for 2018, effective August 31, 2018 as follows:

• Total land value: $3,658
• Total building value (Cost New): $395,923
• Net building value after depreciation and obsolescence: $147,481
• Total value of the subject property: $151,000 (rounded)

27For the 2019 taxation year MPAC’s findings were as follows:

• Total land value: $7,605
• Total building value (Cost New): $395,923
• Net building value after depreciation and obsolescence: $159,639
• Total value of the subject property: $167,000 (rounded)

28MPAC then compared this value with the time adjusted sale values of the six farm sales in its direct comparison sample. MPAC concluded that the range represented by the time adjusted sale values of these six properties shows the value determined for the subject property of $167,000 is below the range and is therefore reasonable.

Appellant’s Case

29The Township believes that MPAC has failed to meet its onus of burden of proof as it relates to the value of the property under appeal. To support this claim, the Township cite the following:

• MPAC erred in its method and approach to value for the building used for the industrial use;
• MPAC erred in its method and approach to value on the land portion of the property used for industrial use;
• MPAC failed to show how the comparable sales in its valuation report support the values returned for the 2018 and 2019 taxation years;
• MPAC’s equity report shows that assessments in the Township at a percentage of current value that lie outside of MPAC’s own acceptable range;
• MPAC’s equity report shows that the resulting Coefficient of Dispersion is above the acceptable levels set by the International Association of Assessing Officers; and
• MPAC continued to include value apportioned to the Farm property class, whereas the subject property cannot be used for farming owing to its size and the other uses present.

30In making its own determination of current value for the subject property, the Township took two separate steps; one to determine the value of the building used for industrial purposes and a second to determine the value of the land used for industrial purposes.

Building Value

31The Township submitted that industrial buildings and farm buildings are valued differently by MPAC. Citing MPAC’s ‘Agricultural Cost Guide’ the Township believes that farm buildings have an approximate 50% external, economic obsolescence applied once the building is valued otherwise. The Township further submitted that this 50% reduction in value is not applied to industrial buildings.

32The Township does not take issue with the value applied to the subject building used for industrial purposes by MPAC but does take issue with the application of external obsolescence. Essentially, the Township agrees with MPAC’s valuation, but not the total depreciation and obsolescence applied. It submits that the value of the building should be determined through the ‘Hanscombe’ cost guide, which is the standard used for industrial properties and not MPAC’s Agricultural Cost Guide.

33To correct MPAC’s findings, the Township applied a straight line 100% increase to the value of the building applied by MPAC. The reasoning was that, since a 50% obsolescence was applied by MPAC using the Agricultural Cost Guide, when that 50 % reduction in value is removed, the effect is that the appropriate, industrial value should be two times the final farm value found by MPAC. The Township submitted the value of the industrial building is $180,000 (rounded).

Land Value

34To arrive at the value of land attributable to the industrial class, the Township undertook a land value study where it compared the assessments of four, one-acre, vacant residential properties that exist in the Township. By averaging the assessed value of these four, one-acre parcels, the Township arrived at a value of $13,600 for one acre of land. The Township submitted that, if the parcels were in fact industrial, their values would have been higher, making the average value determined reasonable in the circumstances.

35The sum of the building and land value, in the industrial property class in the Township’s submissions is $193,185. The Township further submitted that the value of the residential portion of the property is $75,815, adding that no apportionment should be applied to the Farm property class.

The Assessed Person’s Testimony

36The Assessed persons testified that a portion of the property was used, during the time identified in MPAC’s submissions, as a wood working shop and a storage area for milled lumber imported from another property. They also testified that the house and buildings on the property had neither plumbing nor electrical services.

37In response to the Township’s assertion that the property is not a farm, the Assessed persons also testified that portions of the land are used for grazing livestock (horses and a dairy cow) and for vegetable gardening for the use of the family and for sale.

38With respect to the value of the building used for industrial purposes, they also submitted that they could not understand how a building that contained wood working tools would be assessed at a higher value than the very same building that did not contain wood working tools, since the difference in value would be the tools themselves, which are not assessible.

BOARD’S ANALYSIS

39The best evidence of current value is a sale of the subject property that occurred on or near the applicable valuation day. When such a sale does not exist, there are three established approaches to determining the current value of a property:

• The Direct Comparison Approach;
• The Cost Approach; and
• The Income Approach.

40In this case, MPAC opted to disregard the Income approach. This approach determines the value of future returns of a property and is normally used where rental income from multiple tenants is the basis of valuation.

41MPAC’s primary approach used was the Cost Approach, whereby the value of land is added to the value of buildings and improvements. In addition to the cost approach, MPAC also undertook a valuation analysis using the direct comparison approach as a secondary means of ‘testing’ the value derived from the Cost Approach.

The Value of the Land

42The Board has no documentary evidence with which to make a finding on the land value. MPAC reported a total land value, but there was no source of this value in evidence. The Township focussing on the assessment value attributed to a single acre of Residential land. This method resulted in a value of $13,600; a rounded average value of four, one-acre residential properties in the Township. There was no submission or evidence to suggest industrial land and residential land carry the same value in Johnson Township. This comparison is not suitable to determine the land value of the property used for industrial purposes.

Building Value

43The decision by MPAC to use the Agricultural Cost Guide to evaluate the building used for industrial purposes attracted a lot of attention from the Township in cross-examination. The Township views the subject building to be of industrial use and therefore submits the Hanscombe cost guide should be used because it is used for industrial buildings.

44The chief difference between Hanscombe and MPAC’s Agricultural Cost Guide is not so much in the valuation, but in the approach to depreciation and the application of external obsolescence. The Parties agreed about this difference which essentially applies an external obsolescence deduction for all farm buildings to reflect the general external obsolescence in the farming business. This external obsolescence for the building under scrutiny would be approximately 50%, using the Agricultural Cost Guide. Using the Hanscomb cost guide, no external obsolescence is applied. This is the specific difference in value under dispute between MPAC and the Township.

45The Board has no documentary evidence to establish the value of the buildings on the property. MPAC submitted a cost study that simply identified the total building value on the property including those for residential, farm and industrial uses and showed a bulk deduction of that total value for depreciation and obsolescence combined without explaining, even after vigorous cross-examination by the Township, how these deductions were determined.

46In MPAC’s assessment summary, this net value is attributed to each of the buildings assessed at the property. This is not helpful to the Board in making a decision because there is no evidence of the changes to these values arising from the various omitted and supplementary assessments applied by MPAC.

47Despite the multiple disparities between the six properties in MPAC’s Direct Comparison analysis and the subject property, MPAC concluded that the value of the subject property as determined should be considered reasonable because its value fell below all of the proposed comparable properties in the sample.

48The Board finds that the comparison of the subject property to the six properties in MPAC’s comparable property sample is of no value in determining its current value as there were no meaningful adjustments made between these properties and the subject property for differing characteristics.

49The Township relied entirely on MPAC’s finding of value for the building used for industrial purposes. To arrive at its value of the building, the Township simply doubled the value attributed by MPAC to reflect the removal of the approximate 50% deduction applied by MPAC for external obsolescence. This approach takes a flawed valuation and makes it doubly flawed.

50In any case, neither the Township, nor MPAC advanced any documentary evidence to show the basis of value of any of the buildings on the property. Without knowing how the buildings were valued and why, the Board has no evidence to make a finding on their values.

The Industrial Use

51All of the Parties agreed that industrial use takes place at the property and has taken place since August 31, 2018, when the first omitted assessment recognizing industrial activity was applied to the property by MPAC. Accordingly, the Board finds that a portion of the subject property is in the Industrial property class, in addition to the Residential and farm property classes that applied prior to May 1, 2018.

Did MPAC meet its onus under s. 40(17) of the Act?

52The Township sought to impugn MPAC’s evidence in cross-examination, focusing particularly on MPAC’s failure to prove the assessment as required by s. 40(17) of the Act, which states “…the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.”

53The Township submitted that MPAC’s evidence did not show a clear path to the values attributed to the subject property, adding that the values derived from the cost approach lacked the fundamental detail to prove the gross amount of the land and buildings and the net amount of those values once the depreciation and obsolescence was deducted. The Township submitted that no reliable value can be determined without the details of the depreciation and obsolescence values and therefore those elements were not subject to cross-examination.

54The Board finds that MPAC did not discharge its burden of proof in this case. As indicated above in the Board’s analysis, there is no means of determining how the value was derived by MPAC. The result was that no meaningful examination of the data and findings could be made at hearing. This finding raises questions as to how these appeals are to be determined by the Board.

How does Patry apply?

55In Jay Patry Enterprises Inc. v Municipal Property Assessment Corporation, Region 5, 2019 CanLII 39629 (ON ARB), 2018 CanLII 70338 (ON ARB), (‘Patry’), the Board laid out the appropriate framework when it has been determined that MPAC has not discharged its burden of proof of value. The panel in that case determined that a provable value having not been determined by MPAC, the remedy is to consider the evidence of the other Parties.

56In this case the only other documentary evidence is that of the Township. This raises a similar problem on two fronts:

• As the Board found above, the land value approach advanced by the Township does not prove the value of industrial land in the Township; and
• The Township relies entirely on the evidence of MPAC to arrive at a value of the industrial building. Since MPAC’s value is found by the Board to be unreliable, any derivation from MPAC’s values is also unreliable.

57Patry considers such a circumstance: “…If there is insufficient evidence in the record that is capable of proving current value, the Board should fix the assessment at the last uncontested assessed value.”

58Because the Board finds that there is insufficient evidence that is capable of proving current value, the assessment of the subject property is fixed at the last uncontested assessed value. The last uncontested assessed value is the returned value for 2018, prior to any amendments brought by MPAC under s. 33 and s. 32 of the Act. This value is $131,000.

Apportionment

59Despite a lack of evidence with respect to value, the submissions of all three parties are clear in that an industrial use was underway, starting on or before May 1, 2018.

60Section 3 of the Act stipulates that “All real property in Ontario is liable to assessment and taxation….”. Section 7 of the Act states: “The Minister shall prescribe classes of real property for the purposes of this Act.” Section 7.(2) includes “Industrial” as one of the classes prescribed by the Minister.

61These two sections, taken together, indicate that where a specific property class exists, is must be recognized so that it can be assessed under the appropriate classification.

62In this case, the Board does not have sufficient evidence as to the apportioned value of the Industrial property class lands. The Board would fail in its deliberations if there is no value attributed to the Industrial class. Accordingly, the Board attributes a nominal, $1,000 value to the Industrial property class, commencing on August 31, 2018. Additionally, the Board finds that the value of the land in the Industrial property class results in a corresponding reduction in the value of the land in the Farm property class; the most reasonable other classification from which to draw this value.

DECISION

63The Board finds the current value of the subject property is $131,000. The Board also finds that there is no evidence to support a reduction in this value for it to be considered equitable when reference is made to the assessments of similar properties in the vicinity.

64In making this decision, the Board finds as follows:

• Appeal # 3343576, effective date January 1, 2019 returned value of $131,000 is confirmed and apportioned as follows: In the Residential property class: $47,500; in the Farm property class: $82,500; in the Industrial property class: $1,000.
• Appeal # 3373363, effective date January 1, 2018 addition of omitted commercial use is reduced from $24,000 to $0.
• Appeal # 3373364, effective date January 1, 2019 addition of omitted commercial use is reduced from $24,000 to $0.
• Appeal # 3373366, effective date January 1, 2019 addition of supplementary industrial use is reduced from $16,000 to $0.
• Appeal # 3373365, effective date January 1, 2019 addition of supplementary change from Farm property class to Industrial property class is reduced from $69,100 to $1,000.
• Appeal # 3380874, effective date February 28, 2019 correction of apportionment is amended as follows: in the Residential property class $47,500; in the Farm property class $82,500; in the Commercial property class $0; and in the Industrial property class, $1,000.

65Accordingly, the assessment of the subject property as of August 31, 2018, reflective of the omitted assessment applied by MPAC, is $131,000, apportioned as follows:

• In the Residential property class: $47,500
• In the Farm property class: $82,500
• In the Industrial property class: $1,000

66The assessment of the subject property for the 2019 taxation year is $131,000, apportioned as follows:

• In the Residential property class: $47,500
• In the Farm property class: $82,500
• In the Industrial property class: $1,000.