Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
April 03, 2019
WR 155544
Assessed Person(s)/Appellant(s):
Ronald Victor Simmons
Respondent(s):
Municipal Property Assessment Corporation (“MPAC”) Region 32
Respondent(s):
Municipality of Kenora Locality Education
Property Location(s):
con 4 n pt lot 15 rp
Municipality(ies):
Municipality of Kenora Locality Education
Roll Number(s):
6007-690-001-02001-0000
Appeal Number(s):
3255513, 3320856 and 3368374 (deemed 2019 appeal)
Taxation Year(s):
2017, 2018 and 2019 (deemed appeal)
Hearing Event No.
702366
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended
Heard:
August 29, 2018 by telephone conference call
APPEARANCES:
Parties
Representative
Ronald Simmons
Self-represented
MPAC
Jeff Favreau
Municipality of Kenora Locality Education
No one attended
DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING
Background
1Ronald Simmons (the “Appellant”) is the owner of Con 4 N, Pt Lot 15 RP, 1784 Highway 596, Kenora (the “Subject Property”), which is a single-family detached home not on water situated on just over 11 acres adjacent to Highway 596. This highway is known locally as the “Minaki Highway”. The Subject Property is a bungalow built in 1982. The assessment returned was $190,000 for 2017 taxation year and $183,000 for 2018 taxation year. Mr. Simmons appeals both years on the ground that the current value is less than the amounts determined by MPAC. The Subject Property is in the residential class, which 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. Consequently, the Board must determine the value of the Subject Property on January 1, 2016, for the 2017, 2018 and 2019 taxation years (“current value”).
3The Appellant has filed appeals for taxation years 2017, 2018 and 2019 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is his position that MPAC’s assessment of current value is too high and that the correct current value is between $100,000 and $125,000. At this hearing, MPAC takes the position that its assessed value should be reduced to $150,000.
4Pursuant to s. 40(11) of the Act, the Municipality of Kenora Locality Education (“Kenora”) is a party to this proceeding. However, Kenora 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.
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”). This shares the tax burden according to the value of the property possessed by each ratepayer. MPAC takes the position that an equitable reduction is not required. While the Appellant did not assert that an equitable reduction was required, he submitted that MPAC’s equity study was unfair on the basis that the 30 sales were selected rather than being randomly chosen, a fact that MPAC agreed with.
6At 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, 2018 and 2019 taxation years is $132,000. An equitable reduction of this value is required. When applied to this value, the assessment is reduced to $124,000.
Relevant Legislation
- “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:
- 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.
Issues
8The issues to be determined on this appeal are:
What is the correct current value of the Subject Property for the taxation years 2017, 2018 and 2019; and
Whether there should be an equitable reduction of the current value of the Subject Property pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be.
Discussion, Analysis and Findings
Issue 1: What is the correct current value of the Subject Property for the taxation years 2017 to 2019?
MPAC’s Evidence
9Jeff Favreau, a Property Valuation Analyst, represented MPAC. He gave the verbal testimony, and relied on a Valuation Report and an Equity Analysis Report prepared by Angela Russell, also a Property Valuation Analyst. Ms. Russell was not present. Her report was dated March 2, 2018.
10Mr. Favreau began by stating that MPAC was proposing a reduction of the assessment. It had already been revised by MPAC to $163,000, but on further consideration on the ground of equity, MPAC was prepared to recommend a current value of $150,000.
11Mr. Favreau explained that the original reduction in value took place as a result of MPAC’s recalculating the effective lot size. Because of the presence of a large marshy area on the Subject Property, the effective size of the lot was reduced from 11.9 acres to 2 acres. MPAC also removed two sheds built in 1975 because the sheds were no longer usable. Based on these changes, MPAC’s estimate of current value was $163,000. This value was based on the direct sales comparison approach. Ms. Russell had used six comparable property sales that were transacted between July 7, 2012 and April, 2015. All six sales were from the same neighbourhood as the Subject Property: O09-300. All are single-storey homes with septic systems and wells. All but one have basements. Specific relevant details are included below in Table A.
12Based on the analysis of the six sales, MPAC recommends a reduction in value for the Subject Property to $163,000.
13Following this analysis, Mr. Favreau also presented the Equity Analysis Report prepared by Ms. Russell. Having carried out her analysis based on 30 residential property sales of properties around Kenora, Ms. Russell concluded that the median level of appraisal of the 30 sales was 0.922. She determined that this study result demonstrated a lack of accuracy of appraisal among the 30 properties in the vicinity. Ms. Russell therefore multiplied the current value by 0.922, arriving at a reduced assessed value of $150,000 for the Subject Property.
MPAC’s Submission
14Relying on its evidence, MPAC submits that the fair assessed value for the taxation years 2017, 2018 and 2019 is $150,000.
Appellant’s Evidence
15The Appellant represented himself and filed a submission he prepared which contains comprehensive details of the history of his property, aerial photographs of the lot, a thorough critique of MPAC’s documentary evidence, further evidence on MPAC’s chosen comparable property sales, and six comparable residential sales selected by himself. He began by pointing out that none of MPAC’s six comparable sales were inferior to his property. This made it difficult to estimate the value of his home when none were as small as his property.
16The Appellant introduced his six comparable sales. The most relevant details of his study are contained in the following Table A, which summarizes the 12 properties proposed by both parties as comparable sales.
17In addition to introducing six more sales for the Board’s consideration, the Appellant provided photographs of five of MPAC’s six sales, as well as photographs and satellite imagery of the locations of each of his proposed comparable properties with boundaries marked. This was a helpful addition, for it provided visual evidence of the similarities and differences between the various structures and distinguished between the site areas.
18The Appellant had also calculated the increases in assessments among the proposed comparable properties, pointing out that his property had an unusually high increase in the assessed value between the current assessment cycle and the previous one.
Appellants’ Submission
19Relying on his evidence, the Appellant submits that the correct current value for taxation years 2017 and 2018 is between $110,000 and $125,000.
Findings on Issue 1
20The best indicator of current value is the amount paid for a property by a willing buyer to a willing seller in an arm’s length transaction near to the valuation day. Where no such sale has taken place, a frequent means of ascertaining value is to compare the Subject Property and its improvements with similar properties in the neighbourhood which have been sold either near the valuation day or, if possible, within six months either side of that date. In this case, the valuation day is January 1, 2016. In this northern community, homes are not sold as frequently as they may be in more heavily populated areas of the province, and so both parties introduced proposed comparable sales that had taken place from 2012 to 2017. While such a wide time period is not preferable, it is often inescapable in smaller communities such as Kenora.
21Table A sets out some of the details of 12 property sales occurring between July 2012 to November 2017. Each party produced particulars of six sales. While MPAC did not give examples of properties inferior to the Subject Property, the Appellant did, with the result that a wide range in property values was presented. The Appellant is to be commended for filling in additional details with respect to MPAC’s proposed comparable sales. This was very helpful, and made it possible to make a decision on the evidence despite MPAC’s failure to provide any less valuable properties than the Subject Property.
22The proposed comparable properties are all single-storey homes located in rural areas outside of the centre of Kenora. What is interesting to note is that the home with the most in common with the Subject Property is a mobile home situated on just under five acres. While a mobile home would seldom make a suitable comparable sale to a single-family detached home in most circumstances, Property 10 in the attached Table A is a suitable comparable home due to the fact that it is almost the same size as the Subject Property (968 square feet (“sq. ft.”) to the Subject Property’s 955 sq. ft.). Unlike the Subject property, it does not have a basement. However, it serves as an example of a home that would be less valuable than the Subject Property.
23The other proposed comparable sale that is closest in size to the Subject Property is MPAC’s Property 1 (Highway 17 West). This home is only 12 sq. ft. larger than the Subject Property, but its sale value is significantly higher than the value of the Subject Property because of the presence of a finished basement almost the same size as the home. In addition, Property 1 has a detached garage of 588 sq. ft. and a carport. The Subject Property does not. The time adjusted sale price for this proposed comparable property was $250,218 in July 2013. Of the 12 sales being compared in Table A, it is the third most expensive and definitely more valuable than the Subject Property. While neither party was able to provide a photograph of the home itself, the Appellant notes that it is only 8.5 kilometres (“km”) from the centre of Kenora, as contrasted to his home which is 22 km from the city centre.
24The Appellant submitted that his residence was smaller than all the comparable properties with the exception of Property 12. He testified that this property is located close to his property, and that it was purchased at the same time as he purchased his home for the same amount. While it sold in April 2015 for $120,000 (time-adjusted to $123,960), he submitted that it would be worth more than his property as of the valuation day. However, he gave no details on why that might be.
25The Board finds that the Subject Property would be less valuable than Properties 1 through 7 due to the fact that the Subject Property is much smaller than all but Property 1. However, it is of lower quality than Property 1 and lacks the outbuildings that Property 1 has.
26The Subject Property would be less valuable than Property 8 because this home was built 24 years later than the Subject Property. While it lacks a basement, the main floor area is 240 sq. ft. larger, and the lot is double the size of the Subject Property’s actual site area (and almost seven times larger than the effective site area of the Subject Property.). The Appellant’s notes indicate that this proposed comparable property is 6 km closer to the centre of Kenora than the Subject Property. Therefore, while this proposed comparable property would be more valuable than the Subject Property, it would not be significantly more valuable.
27Properties 9 and 10 would be less valuable than the Subject Property due to age (Property 9) and small size (Property 10 is only 13 sq. ft. larger than the Subject Property, but lacks a basement).
28Property 11 would also be less valuable than the Subject Property because, while about the same age as the Subject Property, it lacks a basement. It has a larger main floor, but a smaller site area. The Appellant’s notes indicate that the residence has been empty for several years. A photograph of the exterior of the structure shows a structure with clear deterioration on outer walls.
29Property 12 is smaller than the Subject Property, but has a guest cabin on site. It is much older than the Subject property, having been built in 1935. MPAC records show its construction quality to be 4 or lower than the Subject Property’s construction quality. A photograph provided by the Appellant shows this structure to be a much older design with wooden exterior. This property is several kilometres closer to the centre of Kenora according to the Appellant’s records. However, the Subject Property would be more valuable than this proposed comparable property.
30The closest proposed comparable sales are Properties 8 and 12. Sale 12 indicates that the Subject Property would have sold for more than $123,960, while Sale 8 indicates that the Subject Property likely would have sold for less than $140,625. The Board finds that the current value of the Subject Property is $132,000, which is the average of the time adjusted sales prices of those two sales.
Issue 2: Whether there should be an equitable reduction of the current value pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be.
MPAC’s Evidence
31Evidence provided by Ms. Russell in her Equity Analysis Report for MPAC indicated that, based on 30 sales in the neighbourhood of the Subject Property, similar properties in the vicinity have not been assessed at or near their current values. Ms. Russell had concluded that the current value of the Subject Property should be reduced by 0.922 in order to make it equitable with assessments of similar properties.
32Relying on its evidence, MPAC submits that an equitable reduction is required and the current value for the 2017 and 2018 taxation years should be reduced to $150,000
Appellant’s Evidence and Submission
33The Appellant argued that the evidence showed that all the lower value properties were underassessed, while the higher value properties included in his proposed comparable sales were overassessed. The Appellant argued that the current value should be reduced on the ground of equity.
Findings on Equity
34The purpose of the consideration of equity is to ensure fairness in taxation. What the Board is asked to do by the legislation is to first determine the current value and then to make a finding as to whether that value is fair or equitable with other similar properties in the vicinity of the Subject Property. If the evidence establishes that similar properties in the vicinity are underassessed, fairness requires that the current value be adjusted downward.
35MPAC’s evidence showed that a pattern of under assessing property was likely. MPAC selected 30 sales of residential property in the vicinity of the Subject Property and calculated the Assessment to Sale Ratios (“ASR”). The Board analyzed the same 30 sales based on the mean ASR. In this case, the result shows a mean ASR of 0.939 and a Confidence Interval of 0.050 or 5%. This means that the Board can be confident that the true mean level of appraisal (“LOA”) is between 0.889 and 0.988. This confirms MPAC’S conclusion that property in the vicinity is assessed, on average, below its current value. Applying the mean ASR to the Subject Property current value results in an equitable reduction as follows: $132,000 x 0.939 = $123,948, rounded to $124,000.
DECISION
36The correct current value of the Subject Property is $132,000 for the 2017, 2018 and 2019 taxation years.
37An equitable reduction of the current value of the Subject Property, pursuant to s. 44.(3)(b) of the Act, is required. The assessment of the Subject Property is reduced to $124,000 for the 2017, 2018 and 2019 taxation years.
2019 DEEMED APPEAL
38An appeal for the 2018 taxation year is presently before the Board. Section 40.(26) of the Assessment Act provides that the appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2018 appeal before March 31, 2019. For that reason, this decision also applies to the 2019 taxation year.
39Section 40.(26) of the Act directs:
Deemed appeals, 2009 and subsequent years
(26) For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,
(a) in relation to the assessments under sections 32, 33 and 34 for the year; and
(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.
“Leslie Flemming”
LESLIE FLEMMING
MEMBER
Assessment Review Board
A constituent tribunal of Tribunals Ontario - Environment and Land Division
Website: www.elto.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248 TABLE A: PROPOSED COMPARABLE SALES
NOTES:
(1) “TA” = Time Adjusted
(2) “Yr Built/Q” = Effective Year Built/Quality of Construction (out of 10)
(3) “Build Area” = Total area of building
(4) “Bsmt Area” = basement area
(5) * denotes Mobile Home
TA Sale Price
Date Sold
Yr Built/Q
Effective Site Area (acre)
Build Area (sq. ft.)
Bsmt Area (sq. ft.)
Finished Bsmt (sq. ft.)
Secondary Structures
Subject Property
1982/5
2
955
955
0
0
Property 1 (MPAC)
$250,218
July 2013
1977/6
7.26
967
967
904
detached garage; carport
Property 2 (MPAC)
$276,358
April 2015
1989/6
1.63
1,454
1,454
0
attached garage, lumber sheds
Property 3 (MPAC)
$273,324
May 2013
1991/6
2.03
1,364
1,274
950
0
Property 4 (MPAC)
$194,784
March 2014
1985/5
1.44
1,564
688
0
0
Property 5 (MPAC)
$220,520
May 2013
2001/5
1.4
1,142
650
0
detached garage
Property 6 (MPAC)
$190,751
July 2012
1993/5
1.88
1,632
1,632
0
0
Property 7 (Appellant)
$192,741
December 2015
1979/6
4.8
1,176
1,176
0
0
Property 8 (Appellant)
$140,625
October 2013
2006
13.14
1,195
0
0
0
Property 9 (Appellant)
$97,000
November 2016
1960/5
0.91
1,362
0
0
0
Property 10 (Appellant)*
$88,196
May 2012
1985/5
4.63
968
0
0
0
Property 11 (Appellant)
$80,325
November 2017
1983/5
2.27
1,268
0
0
0
Property 12 (Appellant)
$123,960
April 2015
1935/4
5.43
702
0
0
guest cabin