Bradfield v. Municipal Property Assessment Corporation, 2019 CanLII 22885

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 20, 2019

FILE NO.: WR 157492

Assessed Person(s): Kevin Gregory Bradfield

Appellant(s): Kevin Gregory Bradfield

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 23

Respondent(s): Municipality of Bayham

Property Location(s): 55467 Old Mill Line

Municipality(ies): Municipality of Bayham

Roll Number(s): 3401-000-002-05600-0000

Appeal Number(s): 3312862

Taxation Year(s): 2018

Hearing Event No. 705566

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

Heard: November 5, 2018 in Straffordville, Ontario

APPEARANCES:

Parties

Representative

Kevin Gregory Bradfield

Self-represented

MPAC

Corinne Van Raay

Municipality of Bayham

Lorne James

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

OVERVIEW

1Kevin Bradfield (the “Appellant”) is the owner of 55467 Old Mill Line, which is located in the Municipality of Bayham (the “Subject Property”).

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 (“current value”).

3This is an appeal for the 2018 taxation year. MPAC’s has returned an assessment of $280,000. It is the Appellant’s position that MPAC’s assessment of current value is too high and that the correct current value is $174,000 which is the amount of the initial assessment for the January 1, 2016 valuation day. MPAC’s position is that the 2018 returned assessment is correct.

4Pursuant to s. 40(11) of the Act, the Municipality of Bayham is a party to this proceeding. The Municipality of Bayham attended the hearing as an observer and took no position on the issues.

5Section 44(3)(b) of the Act, directs the Assessment Review Board (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, I reserved my decision. For the reasons that follow, I find that for the 2018 taxation year, the current value of the subject Property as of the January 1, 2016 valuation day is $174,000.

Relevant Legislation

7The 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.

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

8The issue to be determined on this appeal is the current value of the Subject Property for the 2018 taxation year.

Preliminary Matters

9There were initially four appeals before the Board: 2015, 2016 and 2017 omitted assessment appeals under s. 33 of the Act one appeal under s. 40 of the Act for the 2018 taxation year. The 2015 and 2016 taxation years have a valuation day of January 1, 2012 and the 2017 and 2018 taxation years have a valuation day of January 1, 2016. At the commencement of the hearing MPAC’s representative, Corrine Van Raay, advised me that MPAC had failed to disclose its 2016 valuation day evidence to the Appellant until that morning. The Appellant, acknowledged MPAC’s failure to disclose but raised no objection and said he was prepared to proceed with the hearing.

10The Parties agree that they settled the 2015, 2016 and 2017 omitted assessment appeals for a zero value.

MPAC’s Evidence

11Ms. Van Raay describes the Subject Property as having 4.71 acres. It is a rural property with hydro service, a private well and a septic bed. There are three buildings:

• The occupied residence is a single family detached home built in 1870, measuring 1,076 square feet (“sq. ft.”). MPAC has allocated an effective year built of 1923 due to renovations in 1968. This building is currently occupied by the Appellant as his primary residence.

• The incomplete building is a single-family detached residence, which is currently uninhabitable because its construction is incomplete. MPAC has allocated an effective year built of 2010.

• A detached garage built in 1950 measuring 507 sq. ft.

12MPAC allocated the occupied residence with a five out of 10 quality of construction. However, Ms. Van Raay testified that, in MPAC’s opinion, it has a negative value. Ms. Van Raay states that the 2018 taxation year assessment of $280,000 reflects the value of the incomplete new building less a 22 per cent adjustment for its unfinished state and less an additional 10 per cent overall market adjustment to address the limited marketability of the Subject Property due to its “current state”.

13The parties agree that the Appellant took out a building permit in 2005 and construction of the incomplete building has continued since then. Ms. Van Raay testified that MPAC inspected the property nine times since 2005 but did not assess its value until 2017. At that time, MPAC issued an omitted assessment under s. 33 of the Act to reflect the added value of the incomplete building to the Subject Property for 2017 and the previous two taxation years of 2015 and 2016.

14The Municipality revoked the Appellant’s building permit in February 2018 at the request of the Appellant.

15Ms. Van Raay entered into evidence a Valuation Report she prepared dated October 22, 2018. She used the direct sales comparison method to support the assessment of $280,000. She selected six single-family residential properties located in the same neighbourhood as the Subject Property, which is identified as E37-330. None of MPAC’s suggested comparable properties have a second residence, completed or uncompleted, and none have outstanding building permits.

16Ms. Van Raay testified that she used the bracketing method to analyze her suggested comparable properties. However, when asked which are superior, inferior or similar to the subject property, she stated that she considers all of them relatively similar but none are directly similar because none have outstanding building permits and none have unoccupiable residences. She stated she selected her suggested comparable properties based on MPAC’s estimation of the incomplete building’s age.

17Sale 1, 11050 Ridge Line, is located 11 kilometres from the Subject Property. Its lot size is 3.48 acres. It is improved with a single-storey residence of 1,752 sq. ft., built in 2010. It does not have a garage but does have a carport. It sold for $410,000 in October 2015 and has a time adjusted sale price of $413,876.

18Sale 2, 55516 Heritage Line, is located 7.5 kilometres from the Subject Property. Its lot size is 3.11 acres. It is improved with a one-and-three-quarter storey residence of 1,653 sq. ft., built in 1990. It also has a garage and a shed. It sold in May 2015 for $310,000 and the time adjusted sale value is $319,167.

19Sale 3, 4610 Plank Road, is located 3.7 kilometres from the Subject Property. Its lot size is 3.73 acres. It is improved with a one-and-three-quarter storey residence of 1,896 sq. ft., built in 1990 and it has a garage. It sold in May 2014 for $315,000 and the time adjusted sale value is $338,057.

20Sale 4, 49 Chapel Street, is located closest to the Subject Property at 0.8 kilometres. Its lot size is 5.9 acres. It is improved with a single-storey residence of 1,530 sq. ft., built in 2009 and it has a garage. It sold in June 2016 for 365,000 with a time adjusted sale value of $351,130.

21Sale 5, 11347 Ridge Line, is located 11.6 kilometres from the Subject Property. Its lot size is 5.59 acres. It is improved with a single-storey residence of 1,283 sq. ft., built in 1992 and it has a basement garage and an uninsulated barn. It sold in August 2014 for $340,000 with a time adjusted sale value of $363,195.

22Sale 6, 6425 Elgin County Road 55, is located 6 kilometres from the Subject Property. Its lot size is 2.66 acres. It is improved with a single-storey residence of 2,064 sq. ft., built in 2000 and it has a garage. It sold in June 2016 for $423,900 with a time adjusted sale value of $407,792.

23MPAC also submitted a document listing the percentage adjustments given for unfinished factors to support the 22% adjustment for the unfinished state of the Subject Property.

24Finally, Ms. Van Raay submitted a real estate listing for the Subject Property in which the asking price was $550,000 and featured the newer residence.

MPAC’s Submissions

25Relying on its evidence, MPAC’s submits that the correct current value for the 2018 taxation years is $280,000.

26MPAC argues that the average time adjusted sale price per square foot of building area of its six sales is $219.63 while the assessed value per square foot of the incomplete building is $155.00. MPAC argues this supports that the assessed value is reasonable and correct.

27MPAC also argues that the Appellant’s real estate listing supports its position that the incomplete building has value.

28In support of its position that the incomplete building has value, MPAC cited Nussberger v Municipal Property Assessment Corporation, Region 5, 2016 CanLII 2584 (ON ARB) in which Member Weagant found that an unfinished building is an improvement, that it adds value to a property, and that the improvement is assessable.

Appellant’s Evidence

29The Appellant represented himself. He states that MPAC ignored this building from the time he began construction in 2006 until 2017. He argues that MPAC created a new policy in April 2012, and referenced an April 19, 2012 memo to MPAC staff from Brian Guerin, Director, Assessment Standards and Mass Appraisal Office of the Chief Assessor entitled “Assessment of Partially Constructed Residential Primary Structures”. This memo, which was included in MPAC’s evidence, states, in part:

Please implement the following procedures for partially constructed residential homes (unfinished primary structures which are not occupied). Situations may occur where a residential structure is under construction over a number of years and has not yet been occupied… In these rare situations, the unfinished, unoccupied structure may be assessed, with an appropriate unfinished allowance, given that the following conditions have been met: (1) the residential structure is enclosed – that is, the following elements are essential complete: Basement and Foundation, Rough Framing – Walls, Roof, Sheathing, Exterior Doors and Windows, and Roofing Covering (Shingles or other Cover); and (2) the residential structure has been enclosed for 1 full tax year.

30Mr. Bradfield states that a building code rule in place when he took out his building permit was that a property is not assessed until the occupancy permit is taken out. He argues that this rule should continue to apply despite passage of time and that assessment rules should be the same. Mr. Bradfield did not provide documentary evidence in support of his statements.

31The parties agree that they settled the s. 33 omitted assessment appeals for the 2015, 2016 and 2017 taxation years for a zero value. Mr. Bradford argues that the current value of his property is $174,000 because that is the amount initially returned by MPAC for the January 1, 2016 valuation day prior to the omitted assessment notice. He argues that nothing has changed at his property since the valuation day so the value should remain the same.

Appellants’ Submissions

32Relying on MPAC’s initial assessment for the January 1, 2016 valuation day, the Appellant argues that the correct current value for 2018 taxation year is $174,000.

33The Appellant argues that the incomplete building has no value until he takes out an occupancy permit. He also argues that it is unfair to change the rules mid-stream.

34The Appellant argues that none of the properties used in MPAC’s evidence are comparable to the subject property because none have an unfinished second residences and none have an outstanding building permit.

Findings on Current Value

35I disagree with the Appellant that MPAC’s policy of assessing incomplete structures should not be retroactive. In reading this policy memo it is clear that it was created to capture unfinished buildings at the time the memo was written.

36This document also provides that MPAC’s policy is to assess primary structures that are unfinished (emphasis mine). A conclusion may be drawn that an unfinished structure which is the only structure on a property and which is meant for occupancy is the primary structure. However, one cannot make that same conclusion here. The subject property has two residences; one is the Appellant’s occupied and primary residence and the other is not yet fit for occupation. It would be correct to conclude that the primary structure is the occupied home rather than the unoccupied structure. However, regardless of MPAC’s internal policies, I find that the incomplete structure, whether or not it is the primary structure, has value. This is illustrated in the Appellant’s sale listing which MPAC presented in its evidence. However, a listing without a sale does not establish the current value of the Subject Property.

37In support of the current value MPAC presented six proposed sale properties. The Appellant presented none.

Burden of Proof

38Based on the evidence provided, I find that MPAC has not met its statutory burden of proving “the correctness of the current value of the land” as per subsection 40(17) of the Act. All of MPAC’s suggested comparable properties lack a second residential building, none of the residences are comparable to the Appellant’s primary residence, and none are in an unfinished and uninhabitable state. The path from the value of the proposed comparable residences to $280,000 for the Subject Property is unclear.

39Following the reasoning found in Jay Patry Enterprises Inc. v. Municipal Property Assessment Corporation, Region 05 [2018] CanLII 70338 (ON ARB) I find that, in this case, there is insufficient evidence presented by MPAC or the Appellant to make a determination of the correct current value. A fair consequence for MPAC’s failure to meet its statutory burden is to reduce the assessment to the last uncontested assessment of this property. However, I accept the Appellant’s argument that the initial assessment of $174,000, as returned for the January 1, 2016 valuation day, is an acceptable current value. This value is supported by the fact that the parties agreed that the value of the omitted assessment for the 2017 taxation year is zero. Therefore, I set the assessment of the Subject Property at $174,000 for the 2018 taxation year..

DECISION

40MPAC has not met its statutory burden to prove the correctness of the current value and I have no other evidence on which to make a current value determination. I therefore set the assessment of the Subject Property at its last uncontested value of $174,000 for the 2018 taxation year.

41Accordingly, the assessment is reduced from $280,000 to $174,000 for the 2018 taxation year.