Skurdelis v. Municipal Property Assessment Corporation, 2019 CanLII 20815

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 11, 2019

FILE NO.: WR 156442

Assessed Person(s): Lisa Skurdelis, John Dal Bello

Appellant(s): Lisa Skurdelis

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 30

Respondent(s): Town of Killarney

Property Location(s): McGregor Bay

Municipality(ies): Town of Killarney

Roll Number(s): 5136-000-002-02902-0000

Appeal Number(s): 3269587 and 3334687

Taxation Year(s): 2017 and 2018

Hearing Event No.: 703871

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

Heard: September 25, 2018 in Killarney, Ontario

APPEARANCES:

Parties

Representative

Lisa Skurdelis, David Skurdelis, John Dal Bello

Self-represented

MPAC

Andrew Rossanese

Town of Killarney

Julie Solomon (Preliminary Issue Only)

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

Background

1Lisa Skurdelis (the “Appellant”) is an owner of a 2.51 acre vacant residential/recreational property located in northern Georgian Bay in an area known as McGregor Bay. There is no civic address; the legal description is KILLARNEY PCL 533 SRL LDL2352 RP 31R4017 PART 2 (the “Subject Property”). McGregor Bay is accessed by boat from the small communities of Birch Island or Whitefish Falls, off Highway 6. The closest towns serving the area are Little Current and Espanola. This property is not an island but is accessed by water only. The assessment returned for 2017 taxation year is $280,000, and for the 2018 taxation year was $159,000. The Appellant appeals that assessment on the ground that the assessment is too high and does not reflect the current value.

Preliminary issue

2The Appellant filed a Request for Reconsideration (“RfR”) with MPAC for the 2017 taxation year. She did not file an RfR for the 2016 taxation year. However, in filing her appeal, the Appellant inadvertently wrote that she was appealing the 2016 taxation year, part of the last assessment cycle, for which the valuation day was January 1, 2012.

3The parties recessed and met with the Town of Killarney (“Town”) staff in order to find out if the 2016 taxation year was the one which had been intended, or whether the Appellant had intended to appeal the 2017 taxation year. After the hearing reconvened, the parties indicated that they were prepared to proceed on the 2017 taxation year, and a deemed 2018 appeal as well. The RfR had been filed correctly, which gave the Assessment Review Board (“Board”) jurisdiction to hear the appeal. The error had been in filling out the appeal information.

4Julie Solomon for the Town gave evidence in respect of the Town’s records of the recent history of the subject property. There had been a severance affecting this property, and notice was sent by MPAC to the Appellant in respect of the newly-severed parcel. The Appellant had paid the taxes on the new property in respect the notice. She filed the appeal following this, and had written “2016” in error, intending to appeal 2017.

5Following the evidence of the Town and the consent of the parties, the hearing proceeded in connection with the 2017 taxation year.

6Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31, as amended (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, the MPAC is required to assess this value as of the valuation date, January 1, 2016.

7MPAC assessed the value of the Subject Property, as of January 1, 2016, at $280,000 for the 2017 taxation year and $159,000 for the 2018 taxation year, in the residential class. The classification is not in issue. Consequently, the Board must determine the value of the Subject Property on January 1, 2016, for the 2017 and 2018 taxation years (“current value”).

8The Appellant”, takes the position that the Subject Property should be valued at approximately $100,000 or less. MPAC decided to recommend a lower current value than the assessed value, recommending a value of $118,000.

9Pursuant to s. 40(11) of the Act, the Town is a party to this proceeding. However, the Town did not advise the Board of its position on the issues raised in these appeals. While a representative of the Town appeared in connection with the preliminary issue, she did not attend the rest of the hearing. The Town did not provide an opinion as to the correct current value of the Subject Property.

10Section 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 of 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.

11At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value for the 2017 and 2018 tax years is $99,000. Pursuant to s. 44(3)(b) of the Act equitable reduction of this value is not required.

Relevant Legislation

12The 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.

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:

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.

Issue

13The issue to be determined on this appeal is the correct current value of the Subject Property for the taxation years 2017 to 2018.

MPAC’s Evidence

14Andrew Rossanese represented MPAC. He called Todd Carmichael, a Property Valuation Analyst, to testify on behalf of MPAC. Mr. Carmichael filed his Valuation Report, dated April 2, 2018, as well as his Equity Analysis Report.

15The Subject Property is a parcel of vacant residential land on water which is 2.51 acres in size and located on McGregor Bay just west of the Town and east of Manitoulin Island. It is in the Municipality of Killarney. This is a mainland property, but accessible only by boat from one of the small nearby communities of Birch Island or Whitefish Falls off Highway 6. The closest towns are Espanola to the north and Little Current on Manitoulin Island. Residents of McGregor Bay tend to keep their boats at locally owned marinas where they can also park their vehicles.

16The Subject Property was severed from another parcel owned by Ms. Skurdelis’ grandmother. It currently is vacant residential land on water, with waterfront on two opposite ends of the lot.

17The assessment for this property was returned at $280,000 for the 2017 taxation year and at $159,000 for the 2018 taxation year. Since that assessment, MPAC has recalculated the current value of this land and recommends an assessment of $118,000. A 25 per cent discount was applied by MPAC to reflect the fact that this property has more in common with the North-Eastern Manitoulin and the Islands (“NEMI”) properties than properties in Killarney.

18MPAC chose to value this property using the direct sales comparison method. They proposed five vacant property sales in the same area that would assist in deriving the value of the Subject Property. The proposed comparable properties are all vacant waterfront lands in the Municipality of Killarney.

19Mr. Carmichael explained the concept of “time-adjusted” sale prices, noting that the recent change in property values in this region has been a gradual downward progression. Mr. Carmichael based his changes in prices on 77 sales occurring in the Killarney area from January, 2012, to January, 2018, which showed an overall -7.59 per cent downward trend in property values. Mr. Carmichael calculated a time-adjusted sale price for each of the proposed comparable properties so that they would reflect an estimate of value as of the valuation day: January 1, 2016.

20The following chart shows the main information about the five comparable sales chosen by MPAC.

TABLE 1: PROPOSED COMPARABLE PROPERTIES

Property	Site Area (ac)	Sale Date	Sale Price	Time-Adjusted	Access	Hydro?
Subject Property	2.51				Water Access only	No
1 George Island	2.5	May, 2017	$167,500	$171,372	Boat; across from Marina & town	Available
2 Landsdowne Channel	2.72	June, 2012	$160,000	$151.495	Boat only	Available
Philip Edward Island	1.95	July, 2015	$127,500	$126,485	Island Access	No
Philip Edward Island	1.95	May, 2017	$130,000	$133,005	Island Access	No
5 Jumbo Island	2.57	May, 2015	$100,000	$99,061	Island Access	No

21MPAC confirmed that, in assessing remote, water-access-only properties they do not have any way to gauge the time it might take an owner to access the property from the access point. They also confirmed, in cross-examination, that they were not able to tell with certainty whether hydro service was available but ascertained this information on the basis of other nearby properties having hydro available.

MPAC’s Submissions

22Relying on its evidence, MPAC submits that the correct current value for the taxation years 2017 to 2018 is $118,000. The median value of the four proposed comparable water access properties in Killarney was $130,000. They confirm the value as returned, but MPAC made the decision to treat the Subject Property as part of NEMI, an area with which it has more in common. In the result MPAC recommends a reduction of 25 per cent, and asks the Board to reduce the current value to $118,000. MPAC’s equity analysis resulted in a Level of Appraisal and Coefficient of Dispersion within acceptable levels, and so MPAC does not recommend a reduction in current value on the ground of equity.

Appellant’s Evidence

23David Skurdelis represented the Appellant, who is his sister. The Appellant was not present and Mr. Skurdelis gave the evidence on her behalf. Mr. Skurdelis gave a brief history of the Subject Property and the surrounding area. He noted that his grandfather had built many cabins throughout this area of Killarney as it was very sparsely populated.

24Mr. Skurdelis provided a number of exhibits in order to help the Board understand the logistics of accessing the Subject Property, and pointed out that some of the MPAC proposed comparable sales were located much closer to access points. One of those properties is Jumbo Island, which he testified had an assessment for 2016 of $122,000 despite having sold for only $100,000 in 2015. Jumbo Island is a part-island property as opposed to a single-owner island.

25Mr. Skurdelis believes Jumbo Island and the Subject Property are very comparable, although Jumbo Island is superior in the following respects:

(a) hydro cables are routed to the island;

(b) the waterfront is 787 feet because it’s an island, while the depth is 581 feet. This is approximately 4 times the waterfront of the Subject Property; and

(c) Jumbo Island is 15 minutes by boat away from the nearest access point, while the Subject Property is a 45-minute boat trip.

26Mr. Skurdelis entered a real estate listing detailing a McGregor Bay cottage property he identified as the “Hunt Property”. While it has a residence on 5.9 acres, it sold in 2015 for only $200,000. Mr. Skurdelis argued that this property is also about half the distance by boat from the access point. He described the proposed comparable property as a partial island on McGregor Bay, with a cottage, a sleep cottage, and a boathouse. While he admits that the properties are different because the Subject Property is vacant land, it shows that its current value is over-assessed if a fully functional cottage property on the same Bay on about twice the area of the Subject Property sold for only $82,000 more. In comparison, Mr. Skurdelis argues that the Subject Property’s value would be fairer if it was in the area of $70,000.

27Mr. Skurdelis also presented another proposed comparable property identified as TP1700 on McGregor Bay, which is described by him as the “Fairhurst Property”. This property is in the municipality of NEMI, and it is the second closest neighbour to the Subject Property. The site area measures 1.04 acres by 190 feet. Two listings were entered by the Appellant, one showing a price of $89,000 initially and the second showing a reduction in price to $79,000. This property did not sell.

28Mr. Skurdelis was questioned by MPAC about the fact that the Hunt property was built-on, and whether that was a consideration in assessing vacant land. He agreed that he did not know the value of the land without the building, but argued that the building had to add value. If the land with the building was sold for $200,000, then he concluded that the land without the building would have sold for less. Mr. Skurdelis proposed that the land value alone for the Hunt property and for the Subject Property would be approximately $70,000. He stated that, should the Appellant choose to sell the Subject Property, she would accept $70,000 for it.

Appellants’ Submissions

29Relying on his evidence, Mr. Skurdelis submits that the correct current value for taxation years 2017 to 2018 is $70,000.

Findings

30The best indicator of current value is the recent arm’s length sale of a property near to the valuation day. In this case, no such sale took place, and both parties elected to determine the current value by considering the sales of comparable properties. The Subject Property is in the residential property class and is a vacant lot on waterfront – in this case, on McGregor Bay.

31MPAC chose to estimate the value of the Subject Property by looking at the five sales of four comparable vacant lands in the vicinity. MPAC then reduced the assessment by 25%, indicating that this Subject Property had more in common with vacant recreational properties in NEMI than in Killarney. MPAC recommends a current value of $118,000.

32Both parties used the comparable sale known as Jumbo Island. Even though the Subject Property is not itself an island property, it shares more with island properties than mainland properties due to its accessibility only by boat. Jumbo Island is very similar in size (2.57 acres in comparison to the Subject Property’s 2.51 acres.). It is not built on, and the evidence discloses that there is no hydro service on the island at present, although the Appellant found evidence that hydro is available on the island.

33The Board agrees that the Jumbo Island property is the best comparator to the Subject Property. The sale of this property occurred in May, 2015, or seven months prior to the valuation day. The price at the time was $100,000, time-adjusted to $99,061 as of January 1, 2016.

34The Board accepts the Appellant’s arguments that the distance from the access point to the Subject Property is a likely consideration in any purchase of property accessible by water only. In this case, the evidence shows that the Jumbo Island comparable property is much closer to an access point. However, while the Board accepts that the difference in travel time for water access property owners is an important factor in the choice of property, no evidence was given to help me evaluate this element.

35The Board finds therefore that the Subject Property would be of a similar value to the Jumbo Island proposed comparable property. While it is farther from the access point, and has no hydro availability at the site, it is almost the same site area as the Jumbo Island lot. It has a small shed on the property, but this is not enough to make the Subject Property more valuable than the Jumbo Island property.

36The Board finds that the Subject Property would be less valuable than MPAC’s proposed comparable Properties 1, 2 and 3 and 4. These three properties are all water access properties, and similar in size to the Subject Property. However, their locations are closer in proximity to the Town of Killarney than the Subject Property and Jumbo Island. The location of these properties, in relative proximity to the Town of Killarney, makes these properties more valuable than the Subject Property.

37The Hunt Property, a built-on water-access property, is proposed by the Appellant as a comparable sale to the Subject Property. However, because this is a “built-on” property without evidence of the value of the land alone, it is not helpful. The Board cannot speculate at the land value exclusive of the buildings.

38The evidence of the listing agreement of the “Fairhurst” Property is not helpful. Where the listing prices are shown but no sale has taken place, the Board cannot simply surmise that the listing prices were too high; there could be many reasons the property did not sell. That is why the Board prefers evidence of arm’s length sales as evidence of what a willing buyer would pay for land.

DECISION

39The correct current value of the Subject Property is $99,000 for the 2017 and 2018 taxation years.

40An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.

41The Board orders that the assessment be reduced from $280,000 to $99,000 for the 2017 taxation year and from $159,000 to $99,000 for the 2018 taxation year.