Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE: March 5, 2019
FILE NO.: WR 155903
Assessed Person(s): Glenn A. Speiran
Appellant(s): Glenn A. Speiran
Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 28
Respondent(s): Township of Seguin
Property Location(s): 26 Giles Road
Municipality(ies): Township of Seguin
Roll Number(s): 4903-030-006-02410-0000
Appeal Number(s): 3269522 and 3314108
Taxation Year(s): 2017 and 2018
Hearing Event No.: 702964
Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard: September 13, 2018 in Seguin, Ontario
APPEARANCES:
| Parties | Representative |
|---|---|
| Glenn A. Speiran | Self-represented |
| MPAC | Justin Johnstone |
| Township of Seguin | No one appeared |
DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING
Background
1Glenn A. Speiran (the “Appellant”) is the owner of 26 Giles Road in the Township of Seguin (“Township”), a single family detached home on water, with a cabin and boathouse, fronting on Otter Lake. What makes this assessment unusual is the fact that the main house has been under construction for several years while the owner, Mr. Speiran, resides in the cabin. At each assessment, MPAC assessors have to determine the state of completeness of the large structure on the property. In the general reassessment of 2016, MPAC concluded that the main structure was 74% complete. Mr. Speiran disagrees with the level of completeness and it is on this main point that Mr. Speiran appeals his general 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, January 1, 2016.
3MPAC has assessed the current value of 26 Giles Road, the “Subject Property”, as of January 1, 2016, at $788,000. However, the assessment was returned at a value of $599,000 because MPAC reflected a reduction in value for the non-completion of the home. The Assessment Review Board (the “Board”) must determine the value of the Subject Property on January 1, 2016 for the 2017 to 2018 taxation years (“current value”).
4The Appellant has filed appeals for taxation years 2017 to 2018 with the Board, pursuant to s. 40 of the Act. It is his position that MPAC’s assessment of current value is too high and that the correct current value is $330,000. At this hearing, MPAC takes the position that its assessed value is correct.
5Pursuant to s. 40(11) of the Act, the Township is a party to this proceeding. However, the Township did not advise the Board of its position on the issues raised in these appeals, and no one attended the hearing on the Township’s 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. MPAC takes the position that an equitable reduction is not required. The Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.
7At 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 to 2018 tax years is $425,920, rounded to $426,000.
Relevant Legislation
- “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:
For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005.
For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.
For the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.
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.
ISSUE
9The issue to be determined on this appeal is the correct current value of the Subject Property for the taxation years 2017 to 2018.
Discussion, Analysis and Findings
MPAC’s Evidence
10Justin Johnstone, a Senior Case Management Analyst, represented MPAC. Mitch Vaudrie, who is a Property Valuation Analyst, gave evidence for MPAC. Mr. Vaudrie filed his Valuation Report, dated April 25, 2018, and his Equity Analysis Report. He explained that he has been a property valuation analyst for 31 years. He is familiar with the Subject Property and its state of partial completion. Mr. Vaudrie testified that the current assessment is based on only 40% completion of the main building on the Subject Property. Were it assessed as 74% complete, which he thinks it is, the current value would be $788,000. At the present time, the main structure has doors, windows, room definitions, but no cabinetry, no plumbing, and not all windows complete. However, based on the design of the building, the lot on which it’s located, the amount of waterfront and other features, it is still comparable to other homes and cottages in the area, but then receives a discount for its unfinished condition. MPAC is content to treat the residence as 40% complete for the purposes of the 2017 and 2018 assessments.
11Mr. Vaudrie explained the use of the sales of similar properties in the vicinity of the Subject Property as a means of estimating value. This is called the direct comparison approach, and involves adjusting the sales prices of similar properties upwards or downwards to make them relatively comparable to the Subject Property. Mr. Vaudrie selected six other properties on water in the neighbourhood, and compared these properties to the Subject Property. He used a technique called sales ratio trend analysis to adjust the prices paid for these home/cottages to the price that would have been paid on the valuation day. That way, all the sales and the assessment of the Subject Property are aligned on the same day, which makes it easier to draw comparisons.
12Mr. Vaudrie described the Subject Property. It is 1.51 acres in size, with an actual frontage on Otter Lake of 824 feet, but an effective frontage of 360 feet. The property has hydro available and a septic bed. The road to this Subject Property is classed as a seasonal road, but the Appellant noted that he lives on the Subject Property year round.
13The residence has a total area of 2,991 square feet (“sq. ft.”). It was built in 2016, although never completed. It will have three floors, with the first floor area of 1,038 sq. ft., the second floor area of 1,425 sq. ft. and a third level of 529 sq. ft. There is also a basement of 1,038 sq. ft. Water is taken from the lake. Heat will be provided by electric baseboard and electric wall heaters. The home has a southern exposure. The shoreline is described as rocky, with a slight slope. When the residence is finished, it will have 5 bedrooms, 2 bathrooms, and a fireplace. Mr. Vaudrie describes the building as 74% complete, which means that it is closed in and can be sealed.
14Mr. Vaudrie entered an Exhibit which set out the main details of the residential property sales within 4 km of the Subject Property. Table A below sets out the main details of the six sales chosen by MPAC.
15Mr. Vaudrie explained that these sales were all similar in ways to the Subject Property. For example, Sale #1 at Long Arm Lane is described as a Quality 7 construction and similar to the Subject Property on the interior. He testified that the Carter’s Landing Property was similar to the Subject Property as it is today. The Blue Lake Road property is described as having 824 feet of actual frontage, but, like the Subject Property, it has an effective frontage of 360 feet. Mr. Vaudrie indicates that the Subject Property is superior to the Blue Lake Road property, which sold for, $734,000 (prior to the time adjustment), and superior also to the property on Black Bear Path which, sold for $735,000 in late 2017.
16Mr. Vaudrie also gave his Equity Analysis Report, and concluded that the median assessment to sales ratio on 30 sales he had selected was 0.996, which is an acceptable result to MPAC. Mr. Speiran did not present any evidence on the equity issue; therefore the Board will not be ruling on this issue in this case.
TABLE A: PROPOSED COMPARABLE SALES (MPAC)
(See Notes After Table)
| ADDRESS | SALE DATE | TA SALE PRICE | EFF. FRONTAGE | EFF. AREA (ACRES) | BUILD AREA (S.F.) | YR BUILT | OUTBUILDINGS | HYDRO? |
|---|---|---|---|---|---|---|---|---|
| Subject Property | 360 ft. | 1.51 | 2,991 | 2016 | 3 | Yes | ||
| 23 Long Arm Lake Road | Feb 2016 | $856,060 | 330 ft. | 3.16 | 1,836 | 2014 | 0 | Yes |
| 50 Carter’s | Jun 2017 | $616,881 | 164 ft. | 0.71 | 1,796 | 2003 | 1 | Yes |
| 96 Goddard Crescent | Jul 2016 | $717,688 | 180 ft. | 1.81 | 1,590 | 2000 | 1 | Yes |
| 101 Prior Lane | Nov 2016 | $804,097 | 300 ft. | 7.79 | 1,166 | 1992 | 1 (small house) | Yes |
| 314 Blue Lake Road | Jul 2016 | $749,619 | 822 ft. | 2.65 | 785 | 1989 | 2 | No |
| 30 Black Bear | Oct 2017 | $689,519 | 179 ft. | 1.43 | 1,256 | 1982 | 1 | Yes |
Notes:
All properties are single family detached first tier on water
Outbuildings include cabins, boathouses, attached and detached garages unless otherwise specified.
All properties are within 4.22 km of the Subject Property
“TA” means “Time-Adjusted”
MPAC’s Submissions
17Relying on its evidence, and taking into consideration a reduction for incomplete construction, MPAC submits that the correct current value for the taxation years 2017 to 2018 is $599,000.
18The Appellant raised the argument that the incomplete residence was non-taxable and non-assessable. MPAC presented case authorities dealing with this issue in their response to the Appellant’s arguments. Mr. Johnstone introduced, summarized, and explained the relevance of the following cases:
(a) Northern Broadcasting Co. v. Mountjoy (Improvement District) 1950 CanLII 9 (SCC), [1950] S.C.R. 502 (SCC): The Supreme Court of Canada ruled that the definitions of “land”, “real property” or “real estate” within the meaning of the definition of the Act included “All buildings, or any part of any building, and all structures machinery and fixtures erected or placed upon, in, under or affixed to land” and that such inclusion would apply to transformer and transmitter equipment “placed” on the land or inside a building.
(b) Mason v. Municipal Property Assessment Corp. Region No. 02 [2011] O.A.R.B.D. No 104: this stands for the principle that all real property in the province is liable to assessment and taxation. In the case of a floating home, the test is its degree of permanency. The Board found that the floating home, formerly used as a boat, had been attached permanently to the shore for six years, and as such was assessable. MPAC uses this decision to explain the importance of permanence to identifying assessable property.
(c) 1490804 Ontario Limited and Angie Cormpilas v. Municipal Property Assessment Corporation Region No. 15 2016 CanLII 33713 (ON ARB): where a structure described as a plaza was erected in 2013, but not utilized for its commercial purposes until several years later, the Board found that the structure was assessable from 2013 onwards whether in use or not.
(d) Donatelli v. Municipal Property Assessment Corp., Region No. 18 [2011] O.A.R.B.D. No 162: The Board held that a partially-finished home, subsequently damaged by fire, and never occupied, was assessable at its current value, and that assessment was not merely restricted to the value of the land alone.
(e) Lowry v. Regional Assessment Commissioner, Region No. 7 [1995] O.M.B.D. No 378. The Ontario Municipal Board found that deteriorating farm structures would be subject to an unfinished allowance.
(f) Montgomery v. Municipal Property Assessment Corp., Region 7, 2017 CanLII 279 (ON ARB): where the Board held that current value assigned to improvements is based on the assumption that construction has been completed. Where this is not the case, a reduction in value will be allowed for the unfinished portion of a structure.
(g) Lastly, Mr. Johnstone included reference to the Superior Court decision in Carsons' Camp Ltd. v. Municipal Property Assessment Corporation, 2006 CanLII 37591 (ON SC). The Court of appeal allowed an appeal of that decision in Carsons’ Camp Ltd. v. Municipal Property Assessment Corp. 2008 ONCA 17. The Board refers the Ontario Court of Appeal decision which gave a more expanded interpretation of “fee simple” and “land” than the definition in the court below. The Ontario Court of Appeal held that “fee simple” was an expanded definition of “land”, so that it could include property located on the land (such as trailers).
Appellant’s Evidence
19Glenn A. Speiran represented himself, and gave all the evidence in support of his appeal. He had not served his documentary evidence on MPAC, or filed it with the Board, so he was prevented from introducing documentary evidence except for one document: a building permit issued for the Subject Property on August 10, 1994, by the Township of Foley.
20Mr. Speiran advised the Board that it was his belief that the Subject Property was not taxable until it was completed, something which has not yet happened. He described his work on the property and advised that he did not live in the main house but in a small 10-foot by 20-foot cabin on the land without running water.
21Mr. Speiran had not filed evidence of comparable properties in advance of the hearing, but advised the Board that he thought the best comparable property was his next door neighbour at 20 Giles Road. While there had not been a recent sale of this property, Mr. Speiran believed it was a similar size lot to his own, with a similar sized structure on it. He admitted that the house was somewhat smaller, but this was offset by a 15’ X 20’ garage which contained a living area on the top floor.
22Mr. Johnstone looked up MPAC’s information on the property at 20 Giles Road during a break. He confirmed that the assessment had been returned at approximately $480,000, and that the property is 3 acres in size with a 1,097 sq. ft. residence on it plus the garage. MPAC confirmed the length of the waterfront at 282 actual size. The garage is 639 sq. ft. with a second floor of 315 sq. ft. The property is 2.54 acres in size and the total living area is 1,400 sq. ft.
23Mr. Speiran testified that the main building on his property is not livable. He has an electrical panel that he uses to operate his power tools, but there is no general access to other outlets. At this time he takes the water he uses directly from the lake, and obtains drinking water from the Town. He lives in the cabin, but there is no running water there either. While the septic system has been installed, it can’t be used in the winter because the pipes in the main residence freeze.
Appellant’s Submissions
24Relying on his evidence, the Appellant submits that the correct current value for taxation years 2017 to 2018 is $300,000 to $330,000. Despite MPAC’s statement that the property is 74% complete, the Appellant submits that it is only 40% complete and a lot more work must be completed before the home is plumbed and wired and heated.
Findings on Current Value
25The Act requires that assessment be based on the current value of property. For this reason, where there has been a transfer of property at or near the valuation day, this can provide a clear indicator of the current value. However, in many cases like this one, no such transfer has taken place, which means the current value must be estimated using available information from the sales of similar properties in the same neighbourhood as the Subject Property.
26The Appellant raised an argument that the improvements were neither assessable nor taxable when the main building was incomplete and unoccupied. The Board does not agree, relying on a volume of decisions respecting the interpretation of s. 3(1), which states: “All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation…” The exemptions do not include unfinished or unoccupied construction. MPAC relied on a group of decisions, many from the Board. The Board decisions that are not review decisions do not bind the Board, but are illustrative of the way the law on this issue has evolved. In the current appeal, there is no question that the main building, along with the small cabin, are structures on the property and as such are assessable.
27MPAC has assessed the Subject Property as though it were only 40% complete. While MPAC proposed that the main structure was now sealed against the elements, with wall partitions in place and as such was technically much more complete than 40%, it is not necessary to reproduce evidence on this point as MPAC agreed to accept that the Subject Property was only 40% complete for 2017 and 2018, and the Appellant agrees that it is no more than 40% complete.
28MPAC produced six comparable sales in the vicinity, and also introduced evidence on a neighbouring property that Mr. Speiran thought was the most comparable to his own: 20 Giles Road. MPAC looked up and reported the information about this property, although there had been no recent sale. It is clear that, while the 20 Giles Road property is situated on a larger site area, the residence is less than half the size of the Subject Property’s main residence. The Giles Road property has a garage with living area above, but even with this additional 315 sq. ft. of living area, the overall living area of 20 Giles Road is much smaller than the Subject Property’s living space. 20 Giles Road also has a much smaller waterfront than the Subject Property. The Subject Property would be more valuable than the property at 20 Giles Road, even in its unfinished condition.
29The remaining six proposed comparable property sales are all smaller residences or cottages on water in the same neighbourhood as Mr. Speiran’s property. Their sale values, time-adjusted to January 1, 2016, range from $616,881 for 50 Carters’ Road to $856,050 for 23 Long Arm Lane. One of the proposed comparable sales produced by MPAC is 314 Blue Lake Road, a small, one-storey cottage of 785 sq. ft. plus a basement, built in 1989, on a 2.65 acre lot with 822 feet of waterfront. This property has no hydro available, and sold in July, 2016, for $734,000 (time-adjusted to $719,649). The six sales clearly bracket the Subject Property, and confirm that a value of $788,000 is reasonable and supportable for January 1, 2016.
30Mr. Vaudrie clearly identifies that the current value he estimates of $788,000 is what the property would have sold for in January, 2016, in its incomplete condition. He states that $788,000 is 74% of the potential finished value of the Subject Property. However, the actual value of the completed property, with finished residence plus amenities throughout including heat, hydro, running water and year-round septic is still unknown. The Board, like MPAC, is restricted to assessing the land and structures in place rather than hypothetical completed properties in a s. 40 appeal like this one.
31The Board finds that MPAC did a reasonable job of narrowing the current value to suit the circumstances of this unique property. The Board finds that $788,000 is a reasonable current value for the Subject Property when compared to the similar properties in the neighbourhood, all of which are significantly smaller buildings and most with less frontage.
32MPAC has advised that it has based the current value for the assessment of January 1, 2016, for the 2017 and 2018 taxation years on 40% completion rather than on 74% completion. The Board accepts the logic behind the decision: the parties cannot agree on how much of the Subject Property is actually finished, and while the doors, windows, and roof are in place allowing the main structure to be sealed, very little work has been done to the interior, including most of the wiring, plumbing, cabinetry, and so on. Therefore, the Board accepts 40% completion, and as seen in the Donatelli, Lowry and Montgomery decisions, this Board will authorize a discount from the current value on the ground of incomplete structures. If the primary structure is 74% complete, and valued at $788,000, then 40% completion would be worth $425,920, which the Board rounds to $426,000.
DECISION
33The current value of the Subject Property is $426,000 for the 2017 to 2018 taxation years. The Board reduces the assessment for January 1, 2016, from $599,000 to $426,000 for the 2017 and 2018 taxation years.
“Leslie Flemming”
LESLIE FLEMMING
MEMBER
Assessment Review Board
A constituent tribunal of Tribunals Ontario - Environment and Land Division
Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248```