Parazader v. Municipal Property Assessment Corporation, 2019 CanLII 14356

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 21, 2019

FILE NO.: WR 156342

Assessed Person(s): Carole J. Parazader

Appellant(s): Carole Parazader and George Parazader

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 18

Respondent(s): Town of Fort Erie

Property Location(s): 986 Ridge Road North

Municipality(ies): Town of Fort Erie

Roll Number(s): 2703-020-024-26400-0000

Appeal Number(s): 3260227 and 3309681

Taxation Year(s): 2017 and 2018

Hearing Event No.: 704164

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

Heard: September 25, 2018 in Fort Erie, Ontario

APPEARANCES:

Parties	Representative
George Parazader	Self-represented
MPAC	Sheryl McRoberts
Town of Fort Erie	No one appeared

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property, located at 986 Ridge Road North in the Town of Fort Erie (the ‘Town’), has assessments of $183,000 for the 2017 taxation year and $221,000 for the 2018 taxation year. George Parazader and Carole J. Parazader (the “Appellant’s”) believed this assessment was too high and filed an appeal. The Applicants believe the assessment should be lower, based on a smaller increase over the previous 2012 assessment.

2The Assessment Review Board (the “Board”) must decide two things in these appeals. Firstly, the Board must determine the current value of the subject property. Once that decision is made, the Board must then determine if the current value found needs to be reduced for the purpose of equitable assessment.

DECISION

3The Board finds the current value of the subject property is $186,000. The Board also finds that there is no evidence to support a reduction in this amount in order to make it equitable with the assessments of similar lands in the vicinity.

4Neither MPAC nor the Town gave notice to the Board and the other parties, as required under Rule 40 of the Board’s Rules of Practice and Procedures (the “Rules”), of its intention to raise a change in assessment that would result in higher taxation. Increasing the assessment for 2017 would, therefore, be unfair. As a result, the Board confirms the assessment of 986 Ridge Road North, for the 2017 taxation year, at $183,000, in the Residential property class. The assessment for the 2018 taxation year is reduced from $221,000 to $186,000 in the Residential property class.

LEGISLATION

5In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act (“Act”).

6Section 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.

7Section 19.(1) of the Act states:

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

8Section 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

9MPAC submitted a valuation report that considered four properties in Fort Erie that it deemed to be comparable to the subject property. These four properties are located from 0.56 to 4.45 kilometres from the subject property. They are all single family, single-storey dwellings. They sold between October 2016 and September 2017 for prices ranging from $195,000 to $275,000. The Time Adjusted Sale (“TAS”) values of these four properties range from $159,307 to $208,901. MPAC submitted these four sales are indicators of the value of the subject property.

10The four proposed comparable properties have lot sizes ranging from 0.21 to 0.49 acres. The subject property is 16.9 acres in size and includes an environmental zone and a rural residential zone. The comparable properties have residential zoning.

11MPAC submitted a letter authored by the Town, explaining some of the efforts the Appellant has made in the past to advance a development scheme for the subject property. The letter explains that in order to advance development on the site, an amendment to the Niagara Regional Policy Plan would be required to support the extension of municipal services beyond the existing urban area of Fort Erie. The Town describes this process as being “…difficult, costly and time consuming…”.

12MPAC’s position, as a result of this correspondence, is that the subject property should be valued as a single-family dwelling as there is no current evidence to suggest is has a different highest and best use.

13MPAC submitted that the 2017 returned value of $183,000 is reasonable value as it lies within the TAS value of its four proposed comparable properties.

Appellant’s Evidence

14The Appellant’s chief submission was that the January 1, 2016 assessment should be based on a percentage increase over the January 1, 2012 assessment.

15Secondly, the Appellant questioned the comparability of the four proposed comparable properties in evidence. He pointed out that all four were ‘urban’ properties whereas the subject property is in a rural residential setting. He submitted that the four proposed comparable properties were typical urban residential lots and that they could not be compared to the subject property that has a lot of 16.9 acres.

Board’s Analysis

What is the Current Value of the Subject Property

16The best evidence of current value is a sale of the subject property that occurred on or near the applicable valuation day. Where no such sale has occurred, the best indication of value is the comparison of the subject property with other properties with similar characteristics that sold on or near the valuation day.

17The Appellant preferred a method of increasing the assessment returned on the previous valuation day of 2012, to arrive at a current value for the January 1, 2016 valuation day.

18This approach is fundamentally flawed as a means of determining current value. Current value is defined by the Act as the amount of money a property would sell for, between a willing buyer and a willing seller. This requires a comparison based on sale values; not assessment values.

19By simply applying a percentage increase to the previous assessment, there is no accounting for the changes in property sale values over time. This approach also assumes that the previous assessment was correct, that economic conditions throughout the local market remained unchanged in the interim, and that no changes occurred to the subject property. The Appellant had no evidence of any of these conditions.

20The Appellant also submitted that owing to the disparity in lot size between the subject property and MPAC’s comparable properties, a meaningful comparison could not be made.

21MPAC’s position is that comparison of the subject property to properties with smaller lots is fair, owing to the heavy restrictions on development or re-development of the subject property.

22Put another way; even though the 16 + acres of additional land exists at the subject property, the evidence suggests it adds little value because of these development restrictions. This can only be to the Appellant’s advantage. The Board views MPAC’s approach to be reasonable.

23Of the four comparable properties in the analysis, two of them sold in 2017; 18 and 21 months after the valuation day. The Board finds these two sales are therefore not suitable for comparison owing to the change in sale values over that time.

24The Board prefers MPAC’s properties # 2 and # 4, as they sold within 10 months of the valuation day. Details of these two properties, as they compare to the subject property follow in Table A.

Table A

	Comparable #2	Comparable #4	Subject Property
Year Bulit	1954	1990	1983
Bathrooms	1	2	1.5
Dwelling Size	682	990	790
TAS value	$167,987	$203,755	N/A
Mean TAS value	$185,871

25Comparable property #2 is older and smaller than the subject property, and has only one bathroom. Comparable #4 is newer and larger and has two bathrooms. The Board finds these two properties provide a range of value of the subject property owing to these differences. Accordingly, the Board finds the current value of the subject property is the midpoint of the range, which is $185,871, or $186,000, rounded.

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?

26The Appellant did not make a specific submission on the question of equity of assessment.

27MPAC submitted an equity analysis that compared the time adjusted sale value of 51 single-family dwellings in the vicinity of the subject property with their corresponding 2017 assessments. Comparisons of such assessments and time adjusted sale values are a common means of determining if similar properties in the vicinity are equitable assessed. The comparison of these assessments to time adjusted sale values is called the Assessment to Sale Ratio (“ASR”). The range of ASRs in MPAC’s sample was 0.781 to 1.663, with a median of 1.00.

28MPAC’s analysis did not include the ASRs of the four properties used by MPAC to determine current value.

29According to MPAC, no adjustment to the current value determined is required because the median ASR falls within the range identified by it and the International Association of Assessing Officers, (“IAAO”) of 0.95 to 1.05, which indicates that similar properties in the vicinity are being assessed at or very near to their current value, based on sales.

Board’s Analysis

30The 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.

31MPAC’s equity analysis indicates that, when the assessments of 51 similar properties in the vicinity of the subject property are compared with their time adjusted sale values, the result shows that properties are generally assessed below their current value. However, the data from four properties in evidence was not included in this analysis.

32In making its determination of any equity reduction, the Board must be convinced, by the best evidence available that the reduction is warranted. The Board finds that the mean ASR using all properties in evidence is the best evidence of whether or not a reduction in current value is required for the purposes of equitable assessment. When the ASRs of the four additional properties in MPAC’s evidence of current value are added to MPAC’s list of 51 properties in its equity analysis, the results are:

• Mean ASR – 1.020
• Standard Deviation - 0.184
• 95% Confidence Range - 0.049
• Low End of the Confidence Range – 0.972
• High End of the Confidence Range – 1.069

33Based on this sample, the Board can be 95% sure that the true average level of assessment of similar properties in the vicinity is between 97.2% and 106.9% of their current values. That represents insufficient evidence to require a reduction in the current value of the subject property for the purpose of equitable assessment.

CONCLUSION

34The Board finds the current value of the subject property is $186,000. The Board also finds that there is no evidence to support a reduction in this amount in order to make it equitable with the assessments of similar lands in the vicinity.

35Neither MPAC nor the Town gave notice to the Board and the other Parties, as required under Rule 40 of the Board’s Rules, of its intention to raise a change in assessment that would result in higher taxation. Increasing the assessment for 2017 would, therefore, be unfair. As a result, the Board confirms the assessment of 986 Ridge Road North, for the 2017 taxation year, at $183,000 in the Residential property class. The assessment for the 2018 taxation year is reduced from $221,000 to $186,000 in the Residential property class.