Theresa Holroyd v. Municipal Property Assessment Corporation, 2019 CanLII 22883

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 21, 2019

FILE NO.: WR 157698

Assessed Person(s): Theresa Holroyd

Appellant(s): Theresa Holroyd

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 07

Respondent(s): Municipality of Trent Lakes

Property Location(s): 26 Fire Route 226A

Municipality(ies): Municipality of Trent Lakes

Roll Number(s): 1542-020-300-23000-0000

Appeal Number(s): 3338557 and 3338558

Taxation Year(s): 2017 and 2018

Hearing Event No. 709468

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

Heard: December 19, 2018 in Trent Lakes, Ontario

APPEARANCES:

Parties

Representative

Theresa Holroyd

Les Holroyd

MPAC

Stephen Gardiner

Municipality of Trent Lakes

No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

BACKRGOUND

1Theresa Holroyd (the “Appellant”) is the owner of 26 Fire Route 226A in the Municipality of Trent Lakes (the “Subject Property”) which is a seasonal recreational dwelling, first tier on water. This is an older-style cottage located on the shores of Gold Lake north of the Village of Buckhorn. The cottage was built in 1958, on a site just under one and one-half acres in size with 180 feet of frontage on the lake. The subject of this appeal is the value of the property following the general reassessment of 2016. The Appellant argues that the value of this property should be in the range of $260,000 to $300,000 as of the valuation day.

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 $393,000. This property is classified as residential land and this classification is not in dispute. At the end of the hearing, MPAC indicated that it would recommend a current value finding of $378,000. Consequently, the Board must determine the value of the Subject Property on January 1, 2016, for the 2017 to 2018 taxation years (“current value”).

4Pursuant to s. 40(11) of the Act, the Municipality of Trent Lakes is a party to this proceeding. However, Trent Lakes did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on behalf of Trent Lakes.

5Section 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.

6At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the 2017 to 2018 tax years is $270,000. An equitable reduction of this value is not required.

Relevant Legislation

7The Act states that:

1. “current value” means, 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.

9.(1) Assessment of easements.—Where an easement is appurtenant to any land, it shall be assessed in connection with and as part of the land at the added value it gives to the land as the dominant tenement, and the assessment of the land that, as the servient tenement, is subject to the easement shall be reduced accordingly.

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:

3. For the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

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

8The 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

9Stephen Gardiner represented MPAC, and delivered all the evidence in support of MPAC’s position in this appeal. Mr. Gardiner’s Equity Analysis Report and Valuation Report dated November 28, 2017, were entered into evidence. Mr. Gardiner inspected the Subject Property at the end of November, 2017. He indicated that he either confirmed existing measurements or else took new ones.

10This cottage is situated on a lot with an effective site area of 1.44 acres. It is accessible by road. Photographs accompanying MPAC’s valuation package show a modest-sized bungalow situated on a fairly steep slope above Gold Lake. The structure itself is one storey and a total of 785 square feet (“sq. ft.”) in size. The waterfront is 180 feet in length.

11Mr. Gardiner explained the concept of using direct sales comparisons as a means of estimating the value of residential property. This technique is used by MPAC in order to make current value determinations of real property of the same type. In this case, Mr. Gardiner chose four cottage sales occurring in the vicinity of the Subject Property. The salient details are set out below in Table A. In order to ensure that the values of the Subject Property and the proposed comparable properties are all applicable to the valuation day – January 1, 2016 – MPAC employs a system of calculating market changes month-by-month through a Sales Ratio Trend Analysis. In this case, Mr. Gardiner calculated the trend in vacant or improved land sales in the vicinity between September 5, 2012 and September 1, 2017, a period of 60 months. The results of this study allow MPAC to estimate the value of the proposed comparable sales as of January 1, 2016. This is the time-adjusted value. The Appellant did not raise an objection to this method of comparing property sales; the Board will therefore use time-adjusted sale prices in its decision.

12In this case, Mr. Gardiner selected four sales of seasonal residential properties located in the same neighbourhood as the Subject Property. The information about the Subject Property and the proposed comparable properties is contained in the following Table A.

Table A: MPAC’s Proposed Comparable Residential Properties

26 FR 226A

52 FR 242 #1

21 FR 246B #2

83 FR 243 #3

24 FR 232 #4

Sale Date

11/02/2015

008/10/2017

09/25/2013

10/26/2012

Time-Adjusted Sale Price

$488,167

$673,220

$531,179

$451,090

Eff. Frontage (ft.)

180

285

170

153

120

Eff. Site Area (acres)

1.44

2.22

1.29

1.06

1.14

Yr Built

1958

1958

1960

1964

1966

Quality of Construction

4

4.5

4.5

5

4.5

Building Total Area (sq. ft.)

785

826

776

896

800

Secondary Structures

Boathouse

Cabin

13Mr. Gardiner noted that Sales 2, 3, and 4 were, in his opinion, similar to the Subject Property. All the comparable properties are similar in size and age. Based on these comparable properties, Mr. Gardiner testified that they demonstrated that a fair current value for the Subject Property was in the range of $400,000 to $430,000. He commented that none of the proposed comparable properties was inferior to the Subject Property for the reason that anything inferior to it was in the nature of a cabin and not a cottage.

14Mr. Gardiner then presented his Equity Analysis Report, reporting that the 30 sales on which he based his analysis were within 5 kilometers of the Subject Property. The Equity Analysis indicated a Level of Appraisal of 0.986, or a fairly accurate result. The Appellant did not challenge the Equity Analysis.

MPAC’s Submissions

15Relying on its evidence, MPAC submits that the correct current value for the taxation years 2017 to 2018 is in a range of $400,000 to $430,000. However, appreciating that the condition of the structure was poor, MPAC recommended a reduced current value of $378,000. This was the equivalent of applying an “unfinished” allowance of $17% on this property related to its dilapidated state.

Appellant’s Evidence

16Les Holroyd represented Theresa Holroyd in this appeal and gave all the evidence on her behalf.

17Mr. Holroyd filed a comprehensive document which included a synopsis of his argument plus alternative proposed comparable sales from the cottage neighbourhood. He summarized his objections to the four proposed comparable sales referred to by MPAC, and made the following comments:

a. MPAC’s four proposed comparable cottages all have septic tanks and septic beds. The Subject Property does not. Instead, there is a composting toilet inside the cottage. Grey water is pumped up the hill behind the cottage to a pit.

b. The Subject Property has 60-amp hydro service. That is unusually meagre by today’s standards. Mr. Holroyd speculates that the four proposed comparable cottages have higher hydro service to handle today’s electronics.

c. There is minimal plumbing in the Subject Property. Water pumped from the lake fills a pressure tank, and water can be pumped from that tank to the faucets in the bathroom or kitchen. There is no hot water heater. Mr. Holroyd believes that the four comparable sales properties have indoor plumbing.

d. Mr. Holroyd has looked at the four comparable cottages. He says they all have “insulated winterized structures with complete interior wall, floor and roof finishes which are not provided with my property.”

e. None of MPAC’s four proposed comparable sales appear to have a hydro easement across a portion of their property.

f. The condition of the Subject Property has deteriorated much more than the comparable sales cottages. The reason for this is that the cost to cure the deterioration makes no economic sense. If the owner were to maintain the Subject Property in a livable state, she would be required to update the wiring, plumbing, roof, walls and foundation, with the attendant costs. A purchaser of this property would be more inclined to demolish the cottage and build a new one. Also, Mr. Holroyd advises that any major work would require a building permit and then he would be required to install a septic system.

18In addition to examining the four proposed sales from MPAC, Mr. Holroyd also introduced Table B below. This is a careful analysis of other sales in the vicinity that he thinks are more similar properties than the ones selected by MPAC. While Mr. Holroyd used a system of positive and negative adjustments, I have extracted the information from these sales in a fashion similar to the information produced by MPAC. In this way, the cottage properties are more comparable. In order to make these sales comparable to MPAC’s proposed sales, I have applied MPAC’s time adjustment formulae as set out in MPAC’s materials and described above.

TABLE B: Appellant’s Proposed Comparable Sales

Subject

#1 – 8 FR 226A

#2 – 24 FR 232

#3 – 131 FR 214

#4 – 20 FR 147

#5 – 48 FR 218

Sale Date

2014 Nov.

2012 Oct.

2014 May

2016 Jun

2016 Jun

Time-Adj. Sale Price

$245,000 x 1.062 =

$260,190

$375,000 x 1.203 =

$451,125

$305,000 x 1.092 =

$333,060

$325,000 x 0.977 = $317,525

$325,000 x 0.977 =

$317,525

Eff. Frontage (ft.)

180

126

120

110

114

110

Eff. Site Area (ac.)

1.27

0.34

1.14

0.82

0.95

0.86

Year Built

1958

1950

1966

1955

1954

1962

Quality

4

4.5

4.5

4.5

4

4

Building Area (sq. ft.)

785

628

800

672

537

669

Winterized

No

Yes

Yes

Yes

Yes

Yes

Interior Plumbing

Minimal

Yes

Yes

Unknown

Yes

Yes

Secondary Structures?

None noted

None noted

Bunkie

None noted

None noted

None noted

Topography

Steep

Not steep

Steep

Partial

Not steep

Steep

19Mr. Holroyd emphasized that the Subject Property has a hydro easement located approximately 100 feet from the shoreline. To the best of his knowledge, none of the comparable sales has such an easement affecting their land. The impact of the easement is that it restricts the area available for the construction of primary or secondary structures on the lot. In his opinion, this will negatively affect the sales price of the land if it is eventually sold.

20When challenged by MPAC as to the source of his information on the sales included in Table B, Mr. Holroyd testified that any of the information not derived from MPAC’s “About My Property” records came from his own experience in helping a family member build a cottage.

21Further, Mr. Holroyd was asked whether the location of some of these comparable sales on other lakes would reduce the validity of his comparisons. He thought that it was more important to have similar cottages in the area than different and more expensive properties on Gold Lake.

Appellants’ Submissions

22Relying on his evidence, the Appellant submits that the correct current value for taxation years 2017 and 2018 is in a range between $260,000 and $300,000.

BOARD’S FINDINGS

23The very best gauge of current value would be the sale of the Subject Property at or near the valuation day – January 1, 2016. Where no such sale took place, the usual approach in residential property assessment of single family homes is to look at comparable homes sold in the same neighbourhood as the Subject Property and to derive from the sales an estimate of value of the Subject Property.

24The evidence from both parties centered on comparable properties from the area if not necessarily from the same lake. All of the comparable properties submitted were built in the mid -1950’s to the early 1960’s. Most of the comparable properties produced by the parties have between 110 and 180 feet of effective shoreline. One exception is MPAC’s Property #1 – 52 Fire Route 242, which has frontage of 285 feet.

25Between them, the parties have submitted eight comparable cottage sales. Both parties used the sale of 24 Fire Route 232.

26Starting with MPAC’s proposed comparable properties, the Board finds that all four cottage properties would be more valuable than the Subject Property. All have septic systems and are winterized. All four of these properties are deemed by MPAC to be superior in construction quality to the Subject Property. The Appellant has argued that deeming the Subject Property a quality “4” is elevating its true condition unrealistically. While it is approximately the same age as the four comparable sales, it is not insulated and lacks a septic field, and so will be worth less than each of these comparable properties. Since the time-adjusted sale prices of these four cottages puts their values between $451,000 and $673,000, all four cottages are more valuable than $378,000, which is MPAC’s estimate of the Subject Property’s value. Given the lack of a septic system, hot water, and a bath or shower, and given the absence of a foundation, insulation and a modern electrical system, the Subject Property would be worth less than the lowest-priced of these four cottages. However, MPAC has given very little evidence that assists the Board in respect of values less than $451,000.

27The Board accepts the Appellant’s argument that using comparable sales all from one lake is neither practical nor fair. Looking at the comparable sales from nearby lakes is a worthwhile endeavor because the four sales from Gold Lake are all superior properties. In order to estimate the value of the Subject Property, it is preferable to also consider some similar properties and some inferior properties. The Appellant has provided these comparable sales.

28All of the Appellant’s proposed comparable sales have septic systems and plumbing. However, Sale #1, 8 Fire Route 226A, would be less valuable than the Subject Property despite this because of its age (8 years older than the Subject Property), its’ smaller shoreline, significantly smaller lot, and smaller cottage by approximately 160 sq. ft. This property sold for the time-adjusted price of $260,190. The Subject Property would be more valuable than this property.

29Property #3 on Table B above is a smaller cottage on a slightly smaller lot with approximately 70 fewer feet of shoreline. While the quality is noted as a half-class better than the Subject Property, the presence of plumbing in this property is unknown. However, it is winterized. The Appellant notes that the topography is partially steep (which is less steep than the Subject Property). Despite the fact that this property is winterized, it is smaller than the Subject overall, and the Board finds the negative and positive features likely offset each other and that the Subject Property may be similar in value to this property. It sold for the time-adjusted price of $333,060.

30Properties #4 and #5 on Table B above sold for the same price in 2016, which was $325,000, time-adjusted to $317,525. They are both on site areas less than one acre in size, and they both are smaller than the Subject Property cottage, although Property #4 is over 200 sq. ft. smaller. They are both winterized with interior plumbing. Property #5 has steep topography while Property #4 does not. They both have approximately 70 feet less shoreline than the Subject Property. Given the smaller sizes of the structures, the lots and the waterfronts, these two properties are worth approximately the same as the Subject Property with its lack of interior amenities and poor state of repair.

31Given the range of values demonstrated by the eight proposed comparable properties, the Board finds that the Subject Property would have sold for between $317,000 and $333,000 in 2016, or $325,000.

32With respect to the easement, no evidence was led to provide guidance to the Board as to the effect on value that the hydro easement may provide. [See S.9 (1) of the Act above dealing with easements.] With no evidence of the impact of the easement on the land, the Board cannot consider its effect on value.

DECISION

33The correct current value of the Subject Property is $325,000 for the 2017 and 2018 taxation years. An equitable reduction of the current value of the Subject Property is not required.

34The Board therefore reduces the assessment from $393,000 to $325,000 for the 2017 and 2018 taxation years.