Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 06, 2019

FILE NO.: WR 158643

Assessed Person(s)/Appellant(s): Corey Fischer

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

Respondent(s): Township of Schreiber

Property Location(s): 137 Sunset Drive

Municipality(ies): Township of Schreiber

Roll Number(s): 5851-000-003-24000-0000

Appeal Number(s): 3322334

Taxation Year(s): 2018

Hearing Event No.: 709770

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

Heard: February 13, 2019 by telephone conference call

APPEARANCES:

Parties	Representative
Corey Fischer	Self-represented
MPAC	Edward Molcan Glenn Spiess
Township of Schreiber	Don McArthur Marlene Bottomley

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1Corey Fischer (the “Appellant”) is the owner of 137 Sunset Drive (the “Subject Property”), which is located in the Township of Schreiber.

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 the Subject Property at $180,000 for the 2018 taxation year.

4The Appellant has filed an appeal for the 2018 taxation year with the Assessment Review Board (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 should be around $100,000. At this hearing, MPAC takes the position that its assessed values should be confirmed at $180,000 for the 2018 taxation year.

5Pursuant to s. 40(11) of the Act, the Township of Schreiber (the “Township”), is a party to this proceeding. However, the Township had filed no disclosure with the Board. Don McArthur, Chief Administrative Officer for the Township, reserved the right to ask questions as is necessary and was therefore sworn in to actively participate. Mr. McArthur asserts no position of current value.

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 is of the view that an equity reduction is required and that an equitable value should be around $100,000. The Township asserts no position on equity.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds the current value assessment for the 2018 taxation years is $156,000. Therefore, the Board reduces the returned assessment from $180,000 to $156,000 for the 2018 taxation year. Pursuant to s. 44(3)(b) of the Act, an equitable reduction of this value is not required.

RELEVANT LEGISLATION

8Section 1 of the Act states:

1. “current value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.

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

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

10Section 19.2(1) of the Act states:

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

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

11Section 40.(17) of the Act states:

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.

12Section 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.

ISSUES

13The issues to be determined on this appeal are:

1. The correct current value of the Subject Property for the 2018 taxation year.
2. Whether there should be an equitable reduction of the current value of the Subject Property pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be.

Description of the Subject Property

14The Subject Property is a one and a half-storey detached single-family dwelling on water, located at 137 Sunset Drive, in the Township of Schreiber. The Subject Property was built in 1984, with a total building area of 1,480 square feet (“sq. ft.”), a frontage of 60 feet and a total lot size of 0.15 acre.

DISCUSSION, ANALYSIS AND FINDINGS

Issue No. 1: The correct current value of the Subject Property for the 2018 taxation year.

MPAC’s Evidence

15Mr. Spiess, Valuation Specialist for MPAC presents a Valuation Report, dated October 29, 2018 (“Valuation Report”) which he prepared and testifies to the information contained in the report.

16Mr. Spiess states that the Subject Property was inspected on November 8, 2016, and confirmed that the measurements, data, and classification are correct.

17In support of current value, Mr. Spiess states that he relies on the Direct Comparison Approach to value and presents an analysis of the sales of five suggested comparable properties which occurred over the period 2014 to 2016. These five suggested comparable properties are located on Walker Lake, in the same homogeneous neighbourhood, and within 0.22 kilometres, of the Subject Property. The analysis contained both actual and time-adjusted sale prices.

18These five suggested comparable properties are located at 225 Walker Lake Drive, sold in 2014 for $160,000 (time-adjusted sale price of $166,355); at 121 Sunset Drive, sold in 2014 for $150,000 (time-adjusted sale price of $156,276); at 135 Sunset Drive, sold in 2016 for $175,000 (time-adjusted sale price of $173,134) this sale also includes a neighbouring vacant lot; at 115 Sunset Drive, sold in 2015 for $160,000 (time-adjusted sale price of $161,742); and at 64 Sunrise Lane, sold in 2014 for $95,000 (time-adjusted sale price of $98,974).

19These five suggested comparable properties have on average a frontage of 83 feet; lot size of 0.26 acres; year built 1955; quality rating of 5.02; total building area of 1,129 sq. ft.; and sold at an average sale price of $148,000 (time-adjusted sale price of $151,296). This is compared to the Subject Property with a frontage of 60 feet; total lot size of 0.15 acres; built in 1984; quality rating of 5; a total building area of 1,480 sq. ft.; and assessed at $180,000 for the 2018 taxation year.

20Based on this analysis, MPAC estimates the current value to be $180,000, after adjusting these five suggested comparable properties for differences to the Subject Property.

21In response to questions on cross-examination, Mr. Spiess states that the 527 sales used to determine the time-adjustment factor are not used to determine current value. He states that the time-adjustment factor is used to time-adjust the sale prices of the above five suggested comparable properties to the valuation date of January 1, 2016 for comparison to the Subject Property.

MPAC’s Submission

22Relying on its evidence, MPAC submits that the returned assessment of $180,000 for the 2018 taxation year is correct, based on open market sales evidence.

23MPAC argues that despite the economic downturn, waterfront properties are more in demand and selling at higher values than properties located inland in the Township.

Appellant’s Evidence

24The Appellant submits that the returned assessment of $180,000 is too high as compared to similar properties in vicinity. The Appellant argues that the Township has been in an economic downturn since 2010, and has seen the closure of many businesses to date.

25In support of the economic downturn, the Appellant presents a list of 12 companies that went out of business and negatively impacted the Township; and a letter from Mayor Mark Figliomeni (the “Mayor”), dated November 17, 2017 to Carla Y. Nell, Vice President, Municipal and Stakeholder Relations, MPAC, regarding substantial increases in their residents assessments, which ultimately lead to higher property tax bills.

26Amongst other things, the Mayor stated in his letter that the Township has very low assessments when compared to most properties in the Province of Ontario. The highest assessment on a single-family dwelling at that time was $259,000 and the lowest $15,000. The Township anticipated tax bills at end of assessment cycle to be around $615 at the low end and $10,619 at the high end. The net effect is that homes in the Township reach a market value ceiling that can appear quite low but is very real. They believe that this ceiling in a strong market since January 1, 2016 is in the $160,000 to $180,000 range; that in the current assessment there are five properties valued above $200,000 (four of which are properties on waterfront). The Township believes that if the assessments of these five homes were corrected to actual market value the assessments of the rest of the other properties would experience a similar adjustment, resulting in a more equitable distribution. Equity is very important to the Township as over valuations can be an extreme deterrent to new development, particularly with attractive tax rates surrounding the Township.

27The Appellant argues that sales on Walkers Lake were all private sales; that there were no sales for quite some time; that buyers are approaching sellers and making offers higher than the listed price, because these properties on Walkers Lake are more desirable. The Appellant also argues that MPAC should also consider sales from all areas of the Municipality and not only Walkers Lake.

28The Appellant argues that MPAC’s time-adjustment factor is based on 527 sales which occurred in the Township of Schreiber (5 sales) and other neighbourhoods (522 sales) that are approximately 10 kilometres away from the Subject Property. The Appellant argues that using these 522 sales can create inequities in the tax burden, because different Townships have different tax implications.

29The Appellant argues that the direct comparison approach makes no sense because the sample size is too small. He submits that the real estate market varies across the municipalities and that was not taken into consideration when determining the assessed value.

30The Appellant argues that MPAC is not in compliance with their own protocols, because they failed to consider the five major factors (location, lot, living area, age, and quality) in assessing the Subject Property, which they claim represent 85% of property value.

31In support of current value, the Appellant presents 19 suggested comparable properties (8 sold and 11 not sold) in the Township to highlight the differences in assessed values and sales prices to the assessed value of the Subject Property. Some of these suggested properties are located in different homogeneous neighbourhoods within the Township (e.g. the Subject Property is in P03 as compared to A01) and some are waterfront properties and others are not.

32In regard to the 11 suggested comparable properties not sold, they are comprised of vacant lots and improved lots with structures that are located at:

• 201 Winnipeg Street, assessed at $91,000 and located in homogeneous neighbourhood A01;
• 305 Winnipeg Street, assessed at $36,000 and located in homogeneous neighbourhood A01;
• 217 Walker Lake Drive, assessed at $37,000 and located in the same homogeneous neighbourhood as the Subject Property;
• 219 Walker Lake Drive, assessed at $37,000 and located in the same homogeneous neighbourhood as the Subject Property;
• 105 Winnipeg Street, assessed at $65,000 and located in homogeneous neighbourhood A01;
• 223 Walker Lake Drive, assessed at $173,000 and located in the same homogeneous neighbourhood as the Subject Property;
• 108 Centennial Drive, assessed at $148,000 and located in a different homogeneous neighourhood to the Subject Property;
• 115 Sunset Drive assessed at $156,000 and located in the same homogeneous neighbourhood as the Subject Property;
• 125 Sunset Drive assessed at $148,000 and located in the same homogeneous neighbourhood as the Subject Property;
• 141 Sunset Drive assessed at $209,000 and located in the same homogeneous neighbourhood as the Subject Property, was listed two years ago for $209,000 and not sold; and
• 131 Sunset Drive assessed at $168,000 and located in the same homogeneous neighbourhood as the Subject Property, was listed two years ago for $139,400 and not sold.

33In regard to the sales of the eight suggested comparable properties, they are vacant lots, commercial properties, and residential properties located in different neighbourhoods (except the Walker Lake Drive properties) than the Subject Property at:

• 500 Peary Street, sold in 2017 for $47,000 (bank foreclosure);
• 100 Ethel Street, sold in 2017 for $72,000 (residential);
• 203 and 205 Walker Lake Drive , sold in 2018 for $29,350 (vacant lots);
• 113 Centennial Street, sold in 2018 for $16,500 (residential);
• 301 Peary Street, sold in 2018 for $4,225(vacant lot);
• 315 and 317 Ontario Street, sold in 2018 for $6,575 (residential);
• 701 Winnipeg Street, sold in 2018 for $325 (commercial); and
• 309 Scotia Street, sold in 2018 for $7,150 (commercial).

34The sales of these eight suggested comparable properties ranged from $325 to $72,000 and reflect a median sale price of $11,825.

Appellant’s Submission

35The Appellant’s position is that the assessed value of the Subject Property is significantly higher than the above suggested comparable properties whether they are sold or not.

36The Appellant submits that the correct current value for the Subject Property is $100,000 (the combined assessment of 100 Ethel Street at $63,000 plus the assessment of $37,000 for a vacant lot at 217 Walker Lake Drive).

Township’s Evidence

37Mr. McArthur presents oral testimony, reiterating some of the same sentiments from the Mayor’s letter as stated above. Most importantly Mr. McArthur echoed the serious concerns and negative impact of the economic downturn and the impact of assessment values that are too high as compared to open market sales. Mr. McArthur submits that equity is very important to the Township and expresses concerns that if properties are over-valued it can be a deterrent to new developments, which could be lost to surrounding Townships with more attractive tax implications.

Township’s Submission

38Mr. McArthur submits that any assistance to improve equity for properties in the Township would be appreciated.

Findings on Current Value

39Under s. 44.(3)(a) of the Act, the Board must first determine “the current value of the land.” The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the property on the valuation date or close to it.

40In regard to the Mayor’s letter and oral testimony by Mr. McArthur, the Board finds that there is merit to their concerns and would base the findings of this case on the evidence and in particular, sales evidence as of the valuation date of January 1, 2016 as stated by the Act.

41In regard to the Appellant’s issue that the 527 sales used to determine the time-adjustment factor should not be used to determine current value, the Board finds that these sales are not used to determine current value of the Subject Property. Instead, they were used to determine the time-adjustment factor that was applied to the sale prices of the five sales used by MPAC, to estimate what the sale prices would have been at the valuation date of January 1, 2016. The Board accepts the time-adjustment factor.

42In regard to the use of the direct comparison approach and the small sample size of five sales for comparison to the Subject Property, the Board finds that the Appellant presents no other approach to value. The eight sales presented for comparison to the Subject Property by the Appellant occurred well outside of the valuation date of January 1, 2016 to provide a true test of current value. Therefore, the Board puts no weight on this argument.

43In regard to the Appellant’s argument that MPAC is not in compliance with their own protocols, because they failed to consider the five major factors (location, lot, living area, age and quality) in assessing the Subject Property, the Board finds that MPAC is in compliance. In reviewing the five sales presented by MPAC in support of current value, the five major factors were in fact provided in MPAC‘s analysis for comparison to the Subject Property.

44In regard to the Appellant’s 11 unsold suggested comparable properties, the Board did not rely on these suggested comparable properties. The reason being that they are not sold, some of these suggested comparable properties are vacant lots, located in different homogeneous neighbourhoods and are not waterfront properties. The Board finds that these 11 suggested comparable properties provide no true test of current value.

45In regard to the Appellant’s eight sold suggested comparable properties, the Board did not rely on these eight sales, because they sold in 2017 and 2018, which is too far removed from the valuation date of January 1, 2016, to provide a true test of current value. As well, the sales of these suggested comparable properties are not similar to the Subject Property, because they include commercial properties, sale of combined properties, vacant lots, different homogeneous neighbourhoods, and properties that are not waterfront.

46In regard to waterfront verses non-waterfront properties, all three parties (MPAC, the Appellant and the Township) agree that waterfront properties are more desirable and fetch a higher sale price. The Board finds that the evidence clearly demonstrates that assessment values and sale prices of waterfront properties are higher than non-waterfront properties which support the views of all three parties.

47In regard to the Appellant’s opinion of value, the Board rejects the Appellant’s value of $100,000, because it is based on the assessed value of a vacant lot and the assessed value of an improved lot. As stated above, assessment is based on current value, which means the amount of money that is unencumbered and paid by a willing buyer to a willing seller in the open market.

48In regard to the Appellant’s assertion that MPAC’s five sales are not open market sales and the buyers approached sellers and paid more than the asking price for waterfront properties, the Board finds that the Appellant presents no factual evidence to support his claim that the five sales are private sales. Therefore, the Board places no weight to that assertion.

49In reviewing MPAC’s five sales of suggested comparable properties in support of current value, the sale at 135 Sunset Drive, which occurred in 2016, was not relied on by the Board, because the sale price also includes a vacant lot next door (combined sale) and the total building area (687 sq. ft.) is significantly smaller than the Subject Property (1,480 sq. ft.). The sale at 64 Sunset Drive, sold in 2014, was also not relied on because it is significantly smaller in total building area (779 sq. ft.), is significantly older, and with lower quality rating than the Subject Property.

50The remaining three sales are located on the same lake as the Subject Property (Walkers Lake) and on average 0.49 kilometres away. 225 Walker Lake Drive sold in 2014 at a time-adjusted sale price of $166,355. It is a Seasonal/Recreational dwelling first tier on water. 121 Sunset Drive sold in 2014 at a time-adjusted sale price of $156,276. It is a single-family dwelling on water. Finally, 115 Sunset Drive sold in 2015 at a time-adjusted sale price of $161,742. It is a single-family dwelling on water. On average these three comparable properties have a frontage of 67 feet; lot size of 0.17 acre; total building area of 1,392 sq. ft.; and year built 1953. This is compared to the Subject Property which is a single-family dwelling on water, with a frontage of 60 feet, lot size 0.15 acres, total building area of 1,480 sq. ft. built in 1984.

51The above analysis of these three sales prices ranges from $156,276 to $166,355. Based on the evidence the Board finds that the Subject Property is more likely to sell at the lower end of the range at $156,000 rounded. 121 Sunset Drive is the most comparable property and is the best evidence of comparability to the Subject Property. It is a similar type dwelling on water, and located on the same street and very close to the Subject Property.

52Based on all of the above evidence, the Board finds the current value of the Subject Property to be $156,000.

Issue No. 2: Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what the amount of this reduction should be

MPAC’s Submission

53MPAC presents an Equity Analysis Report in which the assessments of 28 comparable properties are compared to their respective sale prices to determine the assessment to sale ratio (“ASR”). The ASR is computed by dividing the assessed values of a property by its sale price.

54MPAC states that these 28 comparable properties include Property Code 391 (seasonal/recreational dwelling on water) and Property Code 313 (single-family detached on water), located within the homogeneous neighbourhood of the Subject Property and other neighbouring communities. These sales occurred over the period from January 1, 2012 to January 1, 2018.

55The analysis of the sale of these 28 comparable properties shows a Level of Appraisal (“LOA”) of 0.99 and a Coefficient of Dispersion (“CoD”) of 22.4. Based on this finding, MPAC is of the opinion that an equity reduction is not required, because similar properties in the vicinity have been assessed at or near their current values.

MPAC’s Submission

56Relying on its evidence, MPAC submits that an equitable reduction of the current value for the 2018 taxation year is not required. Therefore, MPAC argues that the returned assessment of $180,000 should be confirmed for the 2018 taxation year.

Appellant’s Evidence

57The sales presented by the Appellant occurred in 2017 and 2018 and were not relied on by the Board, because they sold well outside the valuation date of January 1, 2016 to provide a meaningful test of equity.

Appellant’s Submission

58The Appellant submits than an equitable value should be $100,000.

Findings on an Equitable Reduction

59The purpose of an equitable reduction has been described by the Ontario Court of Appeal in Empire Realty Co. Ltd. and Assessment Commissioner for Metropolitan Toronto et al., 1968 CanLII 183 (ON CA) at paragraph 6:

A prime objective of municipal taxation is the equitable distribution of the burden according to the value of the property possessed by each ratepayer; in the system prevailing in Ontario, the tax levied on the ratepayer is determined by the application of a uniform mill rate upon the assessed value of the ratepayer's taxable property set down in the assessment roll. If equity in taxation is to be achieved, it must result from equity in assessment.

In addressing equity in assessment, the Court, at paragraph 35, also noted that:

an assessment made at the actual value of lands and buildings … would be an inequitable assessment if all similar lands in the vicinity were assessed at some percentage of actual value substantially less than one hundred ….

60However, the goal of the Act is to determine the correct current value. Any equitable reduction in the current value results in an incorrect current value. Consequently, an equitable reduction should only be made where there is clear evidence to support that such a reduction is warranted. In this regard, the burden of proof rests with the Appellant to establish, on a balance of probabilities, that an equitable reduction is required.

61The term “vicinity” is not defined in the Act, but refers to the appropriate geographical area that will yield meaningful comparable properties, see Ontario Regional Assessment Commissioner, Region No. 3 v. Graham, 1993 CanLII 8621 (ON CA) at page 6.

62In reviewing the above equity analyses presented by MPAC based on the median ASR, the Board finds that the evidence does not support an equity reduction.

63The Board conducted an equity analysis based on the mean ASR of the above sales of the 28 comparable properties presented by MPAC and the result shows a mean ASR of 0.998 and a Confidence Interval of 0.123 (12.3%). This means that the Board can be confident that the true mean LOA is between 87.5% and 1.12%. That is not compelling evidence that similar property in the vicinity is assessed, on average, below its current value. Therefore, an equity reduction is not required.

64The Board also conducted an equity analysis based on the mean ASR of the five sales presented by MPAC in support of current value, which occurred in the same homogeneous neighbourhood of the Subject Property. The result shows a mean of 0.98 and a confidence interval of 0.12 (12%). This means that the true mean LOA is between 86% and 1.10%. That is not compelling evidence that similar properties in the vicinity are assessed, on average, below its current value. Therefore, an equity reduction is not required.

DECISION

65The Board finds the current value of the Subject Property is $156,000 for the 2018 taxation year. Therefore, the Board reduces the returned assessment from $180,000 to $156,000 for the 2018 taxation year.