Leblovic v. Municipal Property Assessment Corporation, 2019 CanLII 18813

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

March 06, 2019

FILE NO.:

WR 157592

Assessed Person(s)/Appellant(s):

Nicholas Jolyon Leblovic and Diane Dorothy Leblovic

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 16

Respondent(s):

Township of Tiny

Property Location(s):

82 Tiny Beaches Road South

Municipality(ies):

Township of Tiny

Roll Number(s):

4368-000-006-24800-0000

Appeal Number(s):

3260377 and 3308590

Taxation Year(s):

2017 and 2018

Hearing Event No.

708465

Legislative Authority:

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

Heard:

November 29, 2018 in Tiny, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

Nicholas Leblovic and Diane Leblovic

Self-represented

MPAC

Michael Notsos⁺

Township of Tiny

No one appeared

DECISION OF THE BOARD DELIVERED BY ROBERT STEINBERG

Background

1Diane and Nicholas Leblovic (the “Appellants”) are the owners of 82 Tiny Beaches Road South (the “Subject Property”), which is a residential single family waterfront residence.

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (“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 value of the Subject Property, as of January 1, 2016, at $1,477,000.

4The Appellants have filed appeals for taxation years 2017 and 2018 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is their position that MPAC’s assessment of current value is too high and that the correct current value is $1,294,000. At this hearing, MPAC takes the position that its assessed value is correct.

5Pursuant to s. 40(11) of the Act, the Township of Tiny (“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 appeared at 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.

7MPAC takes the position that an equitable reduction is not required. The Appellants did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not an issue.

8At 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 is $1,356,000.

Relevant Legislation

9The Act states that:

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.

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

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.

5. (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.

6. (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

10The issue to be determined on this appeal is the correct current value of the Subject Property for the taxation years 2017 to 2018.

Description of the Subject Property

11The Subject Property is classified by MPAC as 391, Seasonal/Recreational Dwelling-First Tier with 205.38 feet of water frontage on Southern Georgian Bay. The Subject Property is improved with a 2,980 square foot (sq. ft.) one and a quarter-storey house and a 672 sq. ft. basement garage. The Subject Property was built in 1935 and underwent a significant interior and exterior renovation, along with a 343 sq. ft. addition, in 2006. The house has four full bathrooms and a1281 sq. basement area with walkout.

Discussion, Analysis and Findings

MPAC’s Evidence

12Ziad Al-Hillal, and Lisa Eakley, both Property Valuation Analysts, testified on behalf of MPAC: Mr. Al-Hillal is a candidate member of the Appraisal Institute of Canada and Ms. Eakley holds the A.I.M.A. with the Institute of Municipal Assessors.

13Mr. Al-Hillal and Ms. Eakley prepared a valuation report (“Valuation Report”) dated July 31, 2018 respecting the Subject Property which they submitted into evidence. Mr. Ziad –Hillal led the evidence presented to the Board.

14Mr. Al-Hillal submitted as evidence a valuation report which describes the Subject Property and four proposed comparable properties. Mr. Al-Hillal concludes that the current value of Subject Property is $1,773,000. Mr. Al-Hillal applies a downward adjustment of 10% to the overall current value assessment based on previous base year appeals. This downward adjustment of 10% was applied to the current value as the structure is considered to be overbuild by MPAC. In addition he applies a further 5% adjustment to the land value component for proximity to a nuisance regrading public walking on the Subject Property The four proposed comparable properties are as follows:

1. 20 Nottawaga Drive

2. 92 Tiny Beaches Road North

3. 458 Tiny Beaches Road South

4. 36 Nottawaga Drive

15Mr. Al-Hillal indicated that the four comparable properties are all in the vicinity, all are waterfront properties, and the nature of them is comparable to the Subject Property.

16Mr. Al-Hillal analysis of the comparable properties is as follows:

• Property 1 has a superior frontage but an inferior structure.

• Property 2 has an inferior frontage and a relatively similar structure.

• Property 3 has an inferior frontage and a relatively similar structure.

• Property 4 has an inferior frontage and a superior structure.

17Mr. Al-Hillal’s response to the Appellants is that based on his analysis using the direct comparison approach, the range of the adjusted selling prices is $1,567,000 to $2,384,000. The Time Adjustment is based on his analysis of a 23 month time period which indicated a change in the market by 18.47% or 0.8% per month. The mean Time Adjusted Sale Price (“TAS”) is $1,864,500. He concluded that the value of the Subject Property is $1,773,000. The rationale for the 10% downward adjustment, it is carried over from a previous Board’s decision due to the overbuilt nature of the residence. The 5% downward adjustment to the land component that was applied to a previous Board’s decision is due to a nuisance which the Board understands was due to the public trespassing over the Subject Property’s beach area. He concludes that the correct current value of the Subject Property is $1,773,000.

MPAC’s Submission

18MPAC relies on Mr. Al-Hillal’s evidence in support of MPAC’s submission that the correct current value assessment (“CVA”) for the 2017 and 2018 taxation years is $1,477,000.

19MPAC’s response to the Appellants in regard to the comparable properties is that these were chosen as they sold very close to the January 1, 2016 valuation date and are similar in nature to the Subject Property.

20MPAC’s response to the Appellants evidence and submission regarding 106 Tiny Beaches Road South is not chosen as a comparable because there was no registered sale on the property.

2190 Tiny Beaches Road North, 188 Tiny Beaches Road North, and 38 Walker Road are not used as comparables by MPAC. No explanation is provided to the Board why these properties were not used as comparables.

22Frontage and area adjustment to the lot size are done by MPAC in a consistent manner, although the Appellants indicate that MPAC’s methodology is different than the market reacts.

23The assessed value of the Subject Property increased by 18.7% between January 1, 2012 and January 1, 2016, whereas 106 Tiny Beaches Road South increased by 4.1%. However there is nothing in the Act requiring that there should be a correlation for different base years, nor is there a requirement that all properties increase at the same percentage.

24The factors that negatively affect the value and sale prices of waterfront properties in the Balm Beach area differently than waterfront properties located in other areas of the Township is addressed through the negative 5% reduction to the value of the land by MPAC.

MPAC’s Response to Appellants’ Submission

25MPAC’s position is that they have fulfilled their obligation as to arriving at the assessment of $1,477,000 which is supported by their analysis of four comparable properties. MPAC states that the Appellants rely on only one comparable and make only subjective submissions from the Appellants’ witness as to time adjustments, waterfront adjustments, and location adjustments of comparable properties.

Appellants’ Evidence

26Nicholas Leblovic appeared before the Board as the Appellants’ representative. Robert Heming is qualified as an expert witness and testified on behalf of the Appellants. Mr. Heming is a sales representative with Realty Executives On the Bay Inc. Brokerage located in Balm Beach. Mr. Heming has over 17 years’ experience in the purchase and sale of both residential and commercial real estate. He has provided advice and opinions in connection with a great number of property assessments in Balm Beach and other parts of the County of Simcoe.

27Mr. Heming’s evidence is that the following three properties, 90 Tiny Beaches Road North, 188 Tiny Beaches Road North, and 38 Walker Road are located in the Township and are more appropriate as comparable properties to the Subject Property.

28Mr. Heming’s evidence is that two of MPAC’s comparable properties, 20 Nottawaga Drive and 36 Nottawaga Drive, are located in a very private location with a private beach.

29Mr. Heming’s evidence is that MPAC’s comparable property located at 36 Nottawaga Drive was built in 2014 and is therefore more up to date and modern than the Subject Property.

30Mr. Heming submitted into evidence several articles from the media that described trespassing, vandalism, verbal confrontations, and a general nuisance from the public in there accessing the Subject Property’s beachfront.

31Relying on his evidence, the Appellants submit that the correct current value for taxation years 2017 and 2018 is $1,294,000.

Appellants’ Submission

32Mr. Heming submits that there are more appropriate comparable properties such as 106 Tiny Beaches Road South.

33Mr. Heming submits that the 18.7% increase in the assessed value from January 1, 2012 to January 1, 2016 base years is not appropriate.

34Mr. Heming submits that the following factors negatively affect the value and sale prices of waterfront properties in Balm Beach compared to other waterfront properties in the Township. These factors are size and quality of beaches, proximity of public beaches and right of access, size, quality and make-up of adjacent and “back lot” properties, and widely publicized disputes in regard to conflicts between the general public use and access over privately held beachfront properties.

35Mr. Heming submits that the comparable property at 20 Nottawaga Drive can be subdivided into three separate lots.

36Mr. Heming submits that waterfront properties, such as 20 Nottawaga Drive and 36 Nottawaga Drive, have typically sold at prices 20% higher than comparable properties in the Balm Beach area. He attributes this to the fact that as a private beach area, with a private road, and all property owners are under the control of the Nottawaga Beach Association (“NBA”). All property owners own shares in the NBA which owns the private access and the one mile beachfront.

37Mr. Heming submits that the increase from the 2012 to the 2016 assessment for the subject property is 18.7% whereas 106 Tiny Beaches Road South increase is 4.1%, 30 Nottawaga Drive increase is 1.6%, 92 Tiny Beaches Road North increase is 1.9%, and 458 Tiny Beaches Road South increase is 2%.

38Mr. Heming submits that other properties used by MPAC in its Equity Analysis Report including 106 Tiny Beaches Road South should be considered by MPAC as the most appropriate comparable.

Appellants’ Response to MPAC’s Submission

39The Appellants point out that MPAC’s submissions are not supported by actual market evidence or specific knowledge that the Appellants’ expert witness has as to how the market works in regard to beachfront properties. The expert witness works daily in the real estate market in this area with purchasers and vendors of beachfront properties and therefore has a much greater in depth knowledge of the valuation of these properties than MPAC’s generalized approach and methodology.

Findings

40Under 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. If, as in this case, no such transaction took place, the next best measure of current value is arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.

41The Board has considered the properties that sold. To enable an estimate of value for the Subject Property to be derived from suggested comparable properties, there must be sufficient comparable elements, in terms of physical factors such as building area, land area, land frontage, age of construction, physical condition, etc. so as to enable a direct comparison to be made.

42The Board, in consideration of the proposed comparable properties submitted by MPAC, finds that they are not comparable in one regard with the Subject Property: location. MPAC and the Appellants do not provide to the Board any evidence of sales in the immediate vicinity of the Subject Property that has the same impacts of trespassing by the general public. The Subject Property is located in an area that is immediately adjacent to an area of public waterfront/beach which the evidence of the Appellants indicates extensive use which in turn leads to trespassing on the Subject Property’s beachfront. Therefore the public disregard for the private ownership rights of the Appellants to the water’s edge in the opinion of the Appellants’ expert witness impacts the current value in a negative manner.

43MPAC arrives at the Current Value of the Subject Property at $1,773,000 by the Direct Comparison Approach. The assessment for the taxation years 2017 and 2018 is $1,477,000 discounted $296,000 or approximately 16.7%.

44The Appellants’ expert witness has indicated in his evidence that in his opinion, due to the unique location of the Subject Property, the anticipated selling price of the properties in this location would be approximately 15-20% lower. He stated that the public will pay less for properties with waterfront issues, such as the Subject Property has, when compared to where there is no public access to the beach front in the immediate vicinity. The expert’s evidence is that the Subject Property falls into this category.

45The Board accepts that the comparables submitted by MPAC as to the size, effective age, and quality class are similar in nature. MPAC also provided a reasonable adjustment to the subject property as it has a considerably larger frontage than the comparables. The Board therefore accepts MPAC starting point of the current value of $1,773,000.

46MPAC however did not sufficiently account for the nuisance related to the location of the subject property. MPAC’s adjustment is a 5% reduction to the land value. The Board finds this is insufficient in that the comparables enjoy a private beach area not readily accessible to the public. Notawaga Beach is a one mile private beach area and is also separated from a public beach by a creek. The Board accepts the evidence of Mr. Heming that MPAC comparables are all in a superior area. Therefore a greater locational adjustment is warranted for the subject property due to its location in Balm Beach.

47The Board accepts the expert witness’s opinion and in discounting the current value 15% due to the nuisance claim. Therefore, the current value determined by MPAC is $1,773,000 which is discounted by MPAC by 10%, due to the overbuilt nature of the residence. This gives a current value of $1,595,700. The Board then applies a 15% discount to the current value due to nuisance to arrive at a current value assessment of $1,356,345, rounded to $1,356,000.

DECISION

48The current value of the Subject Property is reduced from $1,477,000 to $1,356,000 for the 2017 and 2018 taxation years.