Milenko Cimbur and Mervin Davies v. Municipal Property Assessment Corporation, Region 28, 2019 CanLII 20823

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 14, 2019

FILE NO.: WR 156793

Assessed Person(s): Farm Creek Hunt Club

Appellant(s): Milenko Cimbur and Mervin Davies

Respondent(s): Municipal Property Assessment Corporation, (“MPAC”), Region 28

Respondent(s): Municipality of Whitestone

Property Location(s): 18191 Wah Wash Kesh Lake

Municipality(ies): Municipality of Whitestone

Roll Number(s): 4939-050-006-01300-0000

Appeal Number(s): 3262524 and 3314177

Taxation Year(s): 2017 and 2018

Hearing Event No.: 707176

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

Heard: October 30, 2018 at Dunchurch, Ontario

APPEARANCES:

Parties	Representative
Farm Creek Hunt Club Milenko Cimbur and Mervin Davies	Milenko Cimbur and Mervin Davies
MPAC	Paul Milligan
Municipality of Whitestone	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

Background

1Farm Creek Hunt Club (“the Appellant”) is the owner of 32.4 acres of land on Wah Wash Kesh Lake. This property could best be described as a basic hunt camp, built in 1859. The Appellant currently has 24 members, although it was larger at one time. The property is maintained by Milenko Cimbur. This property is divided into two pieces with separate roll numbers. This decision is concerned only with the northern portion of the land belonging to the Appellant (hereinafter “the Subject Property”). The northern section has 3,449.2 feet of waterfront. The assessment was returned in the amount of $503,000, and it is this value that the Appellant disputes. The classification as Residential property is not disputed.

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 value of the Subject Property, as of January 1, 2016, at $503,000, but reduced this amount to $465,000 for 2018. Paul Milligan, a Property Valuation Specialist who represents MPAC at this appeal hearing, advised the Assessment Review Board (the “Board”) that in MPAC’s opinion, the assessment should be reduced to $415,000 for both years.

4The recommended reduction in assessed value followed an inspection of the property on September 21, 2017. Mr. Milligan recommended a number of changes in MPAC’s information once he had inspected the property. Mr. Milligan indicated that MPAC had assessed only one residence on the southern portion of the lot, but he determined that a shed on the lot should actually be valued as a cabin. Mr. Milligan also added a sauna to the assessment, and then another cabin which he estimated had been constructed in 1990. However, also as a result of the inspection, Mr. Milligan determined that the waterfront was over 2,500 feet smaller than originally assessed.

5Consequently, the Board must determine the value of the Subject Property on January 1, 2016 for the 2017 and 2018 taxation years (“current value”).

6Mr. Cimbur, on behalf of the Appellant, has filed appeals for taxation years 2017 and 2018, pursuant to s. 40 of the Act. It is the Appellants’ position that MPAC’s assessment of current value is too high and that the correct current value is in the range of $320,000 to $350,000. At this hearing, MPAC takes the position that its assessed value should be reduced to $415,000 for both years.

7Pursuant to s. 40(11) of the Act, the Municipality of Whitestone is a party to this proceeding. However, the Municipality of Whitestone did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on its behalf.

8Section 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.

9At 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 taxation years is $400,000. An equitable reduction of this value is not required.

Relevant Legislation

10The 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.

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.

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

11The issue to be determined on these appeals is the correct current value of the Subject Property for the taxation years 2017 and 2018.

Discussion, Analysis and Findings

MPAC’s Evidence

12Mr. Milligan represents MPAC and gave the evidence. He authored the Valuation Report dated April 18, 2018, and the Equity Analysis Report, both of which were filed with the Board.

13Mr. Milligan inspected the property in September 2017 and made some corrections to his previous assessment. He noted that the northern portion of the property had 3,449.2 feet of frontage, and that the property is only accessible by boat. It is seasonal residential property. Some properties located on Wah Wash Kesh Lake have year-round access, but this property does not.

14Mr. Milligan described the property as having three cabins, which include the main cabin, a second cabin that had been formerly categorized as a shed, and a third cabin that had been overlooked in the previous cycles. There was also a separate sauna building, and a boathouse/storage building.

15Mr. Milligan explained the concept of using direct sales comparisons of similar properties to assist in estimating the value of the Subject Property in the absence of a sale near the valuation day, January 1, 2016. He also explained this concept of adjusting the sales values of comparable properties to show what their value would have been on the valuation day. He put together the adjustment factors by tracking the overall and monthly change in the market between January 3, 2012 and December 28, 2016, based on 563 vacant and improved land sales occurring in this period. MPAC uses the time adjustment factors for the months in which comparable properties sold to bring the sales value current with the valuation day.

16MPAC used six improved property sales from the area, five on Wah Wash Kesh Lake and one described as Burton Con. 11 Pt. Lot 1 (Sale 2 below). The following chart contains some of the salient facts about these proposed comparable properties.

Table 1: MPAC’s Proposed Comparable Sales (WWK = Wah Wash Kesh)

Sale	Location	TA Sale ($)	Sale Date	Effective Frontage (feet)	Effective Site Area (acres)	Structures: Primary (“P”) & Secondary (“S”)
Sub	18191 WWK Lake			3,449	35	1 (P); several (S)
1	10967 WWK Lake	$442,262	11/18/2016	589	1.71	1(P)
2	Burton Con. 11	$196,043	06/19/2014	800	10	1(P)
3	31399 WWK Lake	$203,386	09/13/2012	680	0.88	1(P), 1 (S)
4	WWK Lake	$361,791	05/27/2015	301	1.67	1(P)
5	15301 WWK Lake	$252,684	11/21/2014	204	0.7	1(P)
6	15309 WWK Lake	$186,711	07/30/2015	203	0.75	2(P)

17Mr. Milligan describes Property 1 as superior with respect to buildings but inferior when comparing waterfrontages. The Subject Property’s waterfront is approximately six times as large. However, the structure on Property Sale 1 is smaller but newer than the Subject Property’s structures. The remaining proposed comparable sales are described as being inferior properties to the Subject Property, largely because the structures are smaller as are lot sizes and water frontages.

MPAC’s Submissions

18Relying on its evidence, MPAC’s submits that the correct current value for the taxation years 2017 and 2018 is $415,000.

Appellant’s Evidence

19Both Mr. Cimbur and Mervin Davies gave evidence as Appellants, although the bulk of the evidence came from Mr. Cimbur.

20Mr. Cimbur outlined the Appellants’ main concerns as follow:

(a) The property has no access to amenities such as hydro, road access, water other than from the Lake, plumbing and sanitation facilities, and no emergency services.

(b) The water levels fluctuate as a result of the dam on the Magnetawan River. In 2018, the water levels rose so high that seven of the Subject Property’s docks washed over the dam.

(c) Part of the land is virtually inaccessible by any means but hiking because of the presence of a 30-foot high rock cliff.

(d) The main building is over 100 years old, and while the Appellant keeps up maintenance of the buildings, they are aging.

(e) The high water levels affect the access point as well, occasionally making launching a boat impossible; and damaging vehicles.

(f) The value of the camp went up 23.44%, which is well over the general property increases noted by MPAC (an overall increase in the market of just over 10%).

21The Appellants proposed a neighbouring property known as “Tracy Island” as a comparable sale. It sold for $320,000 in October 2013. It is only 12 acres in site area but has hydro. The Appellants argue that the Subject Property should be worth about the same amount as Tracy Island.

22The Appellants submit that they would sell the property for between $325,000 and $350,000, were they interested in selling it.

Appellants’ Submissions

23Relying on their evidence, the Appellants submit that the correct current value for taxation years 2017 and 2018 is $325,000 to $350,000. Despite its being an island, and smaller than the Subject Property, the Appellants submit that Tracy Island is the best comparable property. It sold for $320,000 in October 2013. Using MPAC’s time adjustment factors, the value on January 1, 2016, would be $335,000.

24Mr. Cimbur makes the following submission in respect of why Tracy Island should be used as a comparator for valuing the Subject Property. He notes that it is 12 acres in size, while the Subject Property is 8 acres on the portion of land on which the buildings and docks are built. The remainder of the Subject Property is approximately 25 acres situated on the north side of the Lake, which he claims is difficult to traverse and surrounded by swamp land. The Club members access this land usually once a year during hunting season. Otherwise, it is seldom used.

25Mr. Cimbur notes that the consistently rising waters of Wah Wash Kesh Lake have damaged their buildings, vehicles, and docks, and in his opinion, have decreased their shore line. He argues that these are the same problems island dwellers face, so the Tracy Island property makes a good comparable property.

26Mr. Cimbur notes that the quality of construction of the camp is ranked by MPAC as a “4”. He notes that there is no indoor plumbing, no hydro or running water, an outhouse instead of interior sanitary appliances, and the materials that comprise the buildings are old, relatively inexpensive, and in constant need of repair.

27All of these points make this property, in the Appellants’ opinion, worth the same amount as the Tracy Island property despite its smaller size.

Findings

28The most reliable gauge of current value is the price paid for a property in an arm’s length transfer occurring close to the valuation day. The Subject Property did not change hands. The next best method in respect of residential property is to compare the Subject Property to other similar lands that have sold in the same vicinity, and thereby derive a value for the Subject Property.

29In this case, MPAC offered six mainland properties with similarities to the Subject Property, and the Appellants described one nearby property on an island (Tracy Island). None of the comparable properties offered by the parties is as large as the Subject Property, although the Appellants point out that the Subject Property has a large area of land that is very hard to access because of the cliff and the swamp that characterize that portion of the lands.

30It is usually better to compare mainland properties with mainland properties and single owner islands with similar islands. However, the Appellants make a good case for using Tracy Island as a comparator in this case. The owners of both lands face the same kinds of challenges with respect to accessing their lands, being subject to rising water levels due to the presence of the Magnetawan Dam, and being approximately the same distance from the mainland access point. While the Subject Property is not an island, it faces the same seasonal limitations such as not being accessible during periods of ice formation and ice break-up. Tracy Island has the advantage of having hydro to the island, although it is a smaller property with what is described as a single cottage rather than the grouping of buildings found at the Subject Property. On the other hand, the number of buildings at the Subject Property is offset by the fact that the buildings are of basic construction without amenities including hydro, water, and sanitation.

31The Appellants also make the case that the comparable sales put forward by MPAC are, for the most part, very different properties than the Subject Property. Only one sale is deemed superior at least with respect to the buildings (Sale 1) while the other five sales are deemed inferior. Only one of the five is larger than 2 acres. While they may not be island properties, they have very little in common with the Subject Property.

32One of the six MPAC’s proposed comparable sales stands out as having sold for slightly more than four of the other comparable properties, and this is Property 4 – a single family detached dwelling on the east side of Wah Wash Kesh Lake. This property is less than 2 acres in size, with only 301 feet of waterfront, and a single primary structure of 640 square feet. It sold for $361,791 (time adjusted price) in May 2015. The Subject Property would be more valuable than this property due to its larger size and greater number of structures. The primary structure on Property 4 is also given a 4 out of 10 for construction quality, which implies that the properties have structures of a similar basic quality.

33Accepting that Tracy Island is a good comparable property, but smaller with fewer structures, and given that Property 4 is inferior to the Subject Property in area, and numbers of primary and secondary structures, the value of the Subject Property will be higher than the sale value of Property 4 and Tracy Island, but lower than the sale value of MPAC’s Property 1, the superior property that sold for $442,262 (time adjusted) in 2016. This places the subject property in the range of $361,791 and $442,262. Given its unique nature, it is distinct from the three accepted comparable properties. Its value will lie in between these properties, or $400,000.

DECISION

34The correct current value of the Subject Property is $400,000 for the 2017 and 2018 taxation years.

35An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is not required.

36The Board reduces the assessment of the Subject Property for the 2017 taxation year from $503,000 to $400,000 and the assessment for the 2018 taxation year from $465,000 to $400,000.