Bergeron v. Municipal Property Assessment Corporation, 2019 CanLII 16517

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: February 26, 2019

FILE NO.: WR 154342

Assessed Person(s): Carol Lynn Bergeron and Raymond Phillibert Bergeron

Appellant(s): Carol Lynn Bergeron and Raymond Phillibert Bergeron

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

Respondent(s): Superior-Greenstone Dist Locality Education

Property Location(s): 2 Whitesand Lake Road

Municipality(ies): Superior-Greenstone Dist Locality Education

Roll Number(s): 5811-040-001-12300-0000

Appeal Number(s): 3256781 and 3315281

Taxation Year(s): 2017 and 2018

Hearing Event No.: 700768

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

Heard: July 11, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Carol Lynn Bergeron and Raymond Phillibert Bergeron	Self-represented
MPAC	Glenn Spiess
Superior-Greenstone Dist. Locality Education	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

REASONS

Background

1Carol Lynn Bergeron and Raymond Phillibert Bergeron are the owners of 2 Whitesand Lake Road (the “Subject Property”) in the unorganized territory of Superior-Greenstone District Locality Education (“the Municipality”). The residence is a single family detached residence on water, approximately 14 kilometres (“km”) away from Terrace Bay, Ontario and approximately 7 km away from Schreiber. Mr. Bergeron filed an appeal in respect of the 2017 and 2018 taxation years, following a general reassessment of this property which returned a value of $410,000 for 2017 and $409,000 for 2018. Mr. Bergeron attended the hearing and confirmed that, in his opinion, the assessed value for those years are excessive. The Municipal Property Assessment Corporation (“MPAC”) was represented by Glenn Spiess, the Property Valuation Analyst who assessed Mr. Bergeron’s home.

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, January 1, 2016 (“current value”).

3Pursuant to s. 40(11) of the Act, the Municipality is a party to this proceeding. However, as this is an unorganized territory, the Minister stands in for a Municipality. The Minister made no submissions in connection with this appeal.

4Section 40(17) of the Act states that the burden of proof as to the correctness of the current value of the subject property rests with MPAC. For the period 2017 to 2020, the Subject Property is valued as of January 1, 2016. The assessment was returned for the 2017 taxation year in the amount of $410,000 and in the amount of $409,000 for the 2018 taxation year. Because s. 44(3)(b) of the Act requires the Assessment Review Board (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”), MPAC conducts an equity analysis. In this case, MPAC takes the position that an equitable reduction is required. MPAC recommends that the current value of the Subject Property be reduced to $377,000 in order to make the assessment equitable with other residential properties in the vicinity. The Appellant did not take a position on this issue.

5At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value of the Subject Property for the 2017 and 2018 taxation years as at the valuation day, January 1, 2016, is not proven. The Board therefore sets the assessment at its last uncontested value which the Appellant stated to have been $289,000, the assessment for the 2016 taxation year.

6The Act states that:

“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.

Valuation days

19.2 (1) Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows: …

3. For the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

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

7The first issue to be determined on this appeal is the correct current value of the Subject Property for the 2017 and 2018 taxation years.

8The second issue is if an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act is required, and, if so, what the amount of this reduction should be.

Discussion, Analysis and Findings

Issue 1: What is the correct current value of the Subject Property for the 2017 and 2018 taxation years?

MPAC’s Evidence

9Glenn Spiess represented, and also testified for MPAC. He tendered his documentary evidence in the form of Valuation Report and the Equity Analysis Report, authored by him and dated June 5, 2018. No one else testified for MPAC.

10He began his evidence by saying that he was going to recommend a lower value than the amount returned for the Subject Property. He advised that MPAC would be recommending an assessment of $377,000 for the Subject Property. Mr. Spiess introduced the concept of the “Valuation Day” – January 1, 2016 – and the importance of adjusting all comparable property sales to that date.

11Mr. Spiess described the Subject Property as being located about one kilometer away from the Trans-Canada Highway on the east shore of Whitesand Lake. The two-storey home, built in 1965, but with an effective year built of 1995, sits on 0.9 acres, and is ranked by MPAC as being construction quality 6.5. The home is a total of 1,952 square feet (“sq. ft.”) in size, with a first floor of 1,590 sq. ft. and a second floor of 352 sq. ft. There is a basement of 966 sq. ft., of which 628 sq. ft. are finished. This property has two outbuildings, one of which is a shed of 450 sq. ft. and the second of which is a detached garage measuring 624 sq. ft. There are 2.5 bathrooms and 2 fireplaces.

12MPAC uses the direct sales comparison method of determining the value of residential properties. Mr. Spiess explained the concept and provided information on six residential property sales in the area occurring between October, 2013 and August, 2016. Using adjustments derived from his analysis of the sales of 560 residential and vacant property sales occurring between January, 2012 and December, 2017, Mr. Spiess carried out a Sales Ratio Trend Analysis which provided the time adjustment factors for each month of his study. By multiplying the actual sales prices of his proposed comparable homes by the time adjustment factor for the month of the sale, Mr. Spiess derived the estimate of the value of each sale on the valuation day. This adjustment was not challenged by the Appellant.

13The six proposed comparable property sales included a variety of home styles, in the area of Whitesand Lake, Rossport, and Schreiber. In Mr. Spiess’ opinion, none of the sales were relatively comparable to the Subject Property; nor were any of these sales superior. Mr. Spiess testified that it was difficult to find similar properties in the neighbourhood that had been sold in arms’ length transactions close to the valuation day. However, the photographs and data on the selected property comparisons show a number of less attractive and generally smaller homes and cottages, although several with larger site areas.

14The six proposed comparable homes and cottages are all one storey, and ranging in quality of construction ranking from 3 to 6 out of 10. None of the homes are a 6.5 in quality of construction like the Subject Property. Two of the proposed comparable homes have no central heat, no electric baseboard heat – no heat that is recorded. They are seasonal residential homes, unlike the Subject Property which is a single family detached home. The two largest proposed comparable sales are Property 1, Lot 64 Whitesand Lake Road, at 1,298 sq. ft. total size with electric baseboard heat and a wall insert, and Property 3, 115 Sunset Drive at 1,416 sq. ft. with an airtight stove.

15The six proposed comparable properties are all waterfront properties. The Subject Property has 100 feet of effective frontage on Whitesand Lake. Property 1, also on Whitesand Lake, has 113.52 feet of frontage; Property 2, 711 Lloyd Lane, has 349.1 feet of frontage; Property 3, 115 Sunset Drive, has 72 feet of frontage; Property 4, 233 Lakeshore Road, has 324 feet of frontage; Property 5, Lot 41 & 42 Hunter Road, has 400 feet of frontage, and Property 6, Nicol Island, has 158.43 effective feet of frontage.

16Mr. Spiess also reviewed his Equity Analysis Report, based on 30 sales of residential properties within 75 km. of the Subject Property. All these properties were built between 1950 and 1998; they were between 704 and 1,952 sq. ft. in building size; all were situated on lots between 0.19 acres and 5.25 acres. The result of his analysis showed that the median level of assessment of the 30 properties was below the target level of 0.95 to 1.05; it was in fact 0.925. A level of assessment of 1.0 would indicate that assessments were identical to sale prices, while a median level below that showed that properties were generally being assessed below their current value. Mr. Spiess therefore adjusted the final value of the subject property by reducing it to $377,000 so that the value would be equitable with similar properties in the vicinity.

MPAC’s Submissions

17Relying on its evidence, MPAC’s submits that the correct current value for the taxation years 2017 and 2018 is $409,000. However, in order to ensure equity in the assessment process, MPAC recommended reducing the assessed value of the subject property to $377,000.

Appellant’s Evidence

18Raymond Bergeron represented his spouse and himself, and gave evidence in support of his appeal. Mr. Bergeron presented verbal testimony and also provided a written statement of his comments about the assessment at the Board’s request.

19Mr. Bergeron began by pointing out that MPAC’s website contains a description of the closest town, Schreiber, indicating that it is “entering into a period of investment, beautification and revitalization”. In order to bolster his argument that this is not the case, Mr. Bergeron included statistics from two websites, one of which is the 2016 Census Profile, showing that Schreiber has experienced a slow but steady decline in population. Mr. Bergeron points out that there have been no new housing starts that he can remember for the past 10 years, and that while Terrace Bay enjoys a very modest increase in population, Schreiber has seen the opposite.

20Both Mr. Bergeron and Carol Lynn Bergeron made a number of improvements to the Subject Property when they retired in 2011, converting their panabode cottage into a 3-bedroom, 2.5-bathroom year-round home. They have also added a pole barn and wood shed. Mr. Bergeron notes that the increase in his property value in the current assessment cycle is excessive and not in keeping with the nature of the modest improvements.

21Mr. Bergeron noted that there had been some local home sales, but he did not provide specifics to compare the sold properties with his home. He stated that his property is valued at 35% more than a house in town would be valued just because it’s on water, a fact which he accepts.

Appellants’ Submissions

22Relying on his evidence, the Appellant submits that the correct current value for taxation years is between $200,000 (if his house was situated in town) and $270,000 or 35% more in its location on the lake.

23Mr. Bergeron argued that MPAC should be basing property values on local economies rather than on sales. Basing the value of home assessments on local economies would make housing more affordable for more people. He concluded that, in a community that suffers from a declining population and declining industry, a $400,000 home would not sell.

Findings on Current Value

24The first consideration is whether or not MPAC has met its statutory burden of proving “the correctness of the current value of the land” as per subsection 40(17) of the Act.

The Burden of Proof

25In this case, there is really no evidence from either party that supports a particular value for the land. MPAC provided six comparable residential property sales, but none of them are really comparable with the Subject Property, and all are thought inferior by MPAC. The path from the value of the proposed comparable residences to $409,000 for the Subject Property is unclear.

26Recognizing that MPAC may not have met its burden, the Board asked the parties to comment on a series of questions modelled on the recent decision of this Board in Jay Patry Enterprises Inc. v. Municipal Property Assessment Corporation, Region 05 [2018] CanLII 70338 (ON ARB) (“Jay Patry Enterprises”). The questions address the issue of burden of proof, and ask the parties to provide written submissions as to whether MPAC has met it burden as set out in section 40(17) of the Act. The parties were also asked to comment on what possible consequences, if any, should follow if MPAC had failed to meet its burden. The Board asked the parties to explain the reasoning for any consequences they proposed, and asked them to comment on what consequence, if any, should be applied in this case. Both parties responded.

27Mr. Bergeron’s responses demonstrated that he had a good understanding of the concept of “burden of proof”, and clear ideas as to whether MPAC had met the burden or not – he thought not. When commenting on possible consequences, if any, for MPAC, Mr. Bergeron had several suggestions, including having a discussion among the Town Council and reassessing all the properties in the area paying attention to the declining population and declining employment prospects in Schreiber. He was in agreement with the Board panel in Patry that to reduce the current value to zero was irrational and would create a burden on the remaining taxpayers in the community. Instead, Mr. Bergeron recommended a value “roll-back”, and spelled out several ways this could be carried out.

28The Board thanks Mr. Bergeron for the time and effort he has put into his responses to the questions. He has made some interesting and valuable proposals, although none that were within the jurisdiction of the Board itself but rather involved community-oriented changes to how assessment is carried out in a small town like Schreiber.

29MPAC responded to the Board’s questions as well. Brittany Kee, a Senior Case Management Analyst with MPAC, filed her responses. Generally, she supported the evidence provided by MPAC, and submits that s. 19(1) of the Act is satisfied by the evidence contained in the Valuation Report, and that section 44(2) of the Act is satisfied by the Equity Analysis Report filed in connection with this matter.

30Ms. Kee advocated that no consequences were appropriate in this matter, because, in her opinion, the evidence provided by MPAC satisfied the requirements of s. 40(17). She admonishes the Board that information presented to it is on time and in accordance with the Board’s Rules and procedures should form the only evidence on which the Board should base its decision.

31The Board thanks Ms. Kee also for her cogent and concise response to the questions sent by the Board.

32Following the reasoning of Member Jebreen and Vice Chair McAnsh in Jay Patry Enterprises the Board finds that, in the circumstances of this case, there is insufficient evidence presented by MPAC or Mr. Bergeron to make a determination of the correct current value. A fair consequence for MPAC’s failure to meet its statutory burden is to reduce the assessment to the last uncontested assessment of this property. In the present case, that would be the assessment for the 2016 taxation year. At that time, the Appellant advises, the Subject Property was assessed at $289,000.

33The Board concludes that the current value as of January 1, 2016, has not been proven. The Board therefore sets the assessment at the last uncontested value for the Subject Property which is $289,000.

Issue 2: Should there be an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be

MPAC’s Evidence

34MPAC concluded that similar properties in the area had not been assessed at or near their current values, and so recommended a reduction of 0.925 per cent to the current value.

Appellant’s Evidence

35The Appellant made no representations on the issue of equity.

Finding on Equity

36Where a current value has not been proven by either party, and where the Board has gone back to the last uncontested assessment, there is insufficient evidence to find a presence or absence of equity. While the Board is required to consider the equitable issue, in the absence of evidence, there is no necessity to make an adjustment on this ground when the current value has not been determined.

DECISION

37The correct current value of the Subject Property has not been proven. The Board sets the assessment at $289,000 for the taxation years 2017 and 2018. The Board reduces the assessment of the Subject Property from $410,000 to $289,000 for the 2017 taxation year, and from $409,000 to $289,000 for the 2018 taxation year.

38An equitable reduction, pursuant to s. 44.(3)(b) of the Act, is not required.