Jean Kearns and Lawrence Goreski v. Municipal Property Assessment Corporation, 2019 CanLII 32435

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

April 08, 2019

FILE NO.:

WR 159093

Assessed Person(s)/Appellant(s):

Jean Kearns; Lawrence Goreski

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”), Region 07

Respondent(s):

City of Kawartha Lakes

Property Location(s):

602 Sturgeon Point Road

Municipality(ies):

City of Kawartha Lakes

Roll Number(s):

1651-210-060-01501-0000

Appeal Number(s):

3275763, 3275761, 3293000, and 3348853 (deemed 2019 appeal)

Taxation Year(s):

2016, 2017, 2018 and 2019 (deemed appeal)

Hearing Event No.

710374

Legislative Authority:

Section 40, and Section 33 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard:

March 05, 2019 in Lindsay, Ontario

APPEARANCES:

Parties

Representative

Jean Kearns;

Self-represented

Lawrence Goreski

MPAC

Judy Piggott

City of Kawartha Lakes

No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1Jean Kearns and Lawrence Goreski (the “Appellants”) are the owners of 602 Sturgeon Point Road (the “Subject Property”), which is located in the City of Kawartha Lakes.

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 2013 to 2016 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2012; and 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 current value of the Subject Property at $412,000 for the 2016 taxation year (original assessment of $90,000 + omitted assessment of $322,000); and assessed the current value of the Subject Property at $458,000 for the 2017, 2018, and deemed 2019 taxation years.

4The Appellants have filed an appeal for the 2016 taxation year with the Assessment Review Board (the “Board”), pursuant to s. 33 of the Act. It is their position that MPAC’s assessment of current value is too high and that the correct current value should be around $370,000 (Land value of $90,000 + $280,000 omitted assessment). At this hearing, MPAC takes the position that its assessed values should be confirmed at $412,000 (Land value of $90,000 + $322,000 omitted assessment) for the 2016 taxation year.

5The Appellants have filed appeals for the 2017, 2018, and deemed 2019 taxation years with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is their position that MPAC’s assessment of current value is too high and that the correct current value should be around $415,000. At this hearing, MPAC takes the position that its assessed values should be confirmed at $458,000 for the 2017, 2018 and deemed 2019 taxation years.

6Pursuant to s. 40(11) of the Act, the City of Kawartha Lakes (the “City”), is a party to this proceeding. However, the City had filed no disclosure with the Board and no one appeared on their behalf.

7Section 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 Appellants assert no position on equity. Therefore, in this proceeding, this ground for appeal is not in issue.

8At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds as follows:

Current Value for 2016 taxation year

9The current value of the Subject Property is $418,000 for the 2016 taxation year, which supports the returned assessment of $412,000. The Board confirms the returned assessment of $412,000 and finds the omitted assessment to be $322,000 ($412,000 - $90,000 original returned assessment for land only). Therefore, the Board confirms the omitted assessment of $322,000 effective January 1, 2016.

Current Value for 2017, 2018 and deemed 2019 taxation years

10The current value is $464,000 for the 2017, 2018, and deemed 2019 taxation years and this value supports the returned assessment of $458,000. Therefore, the Board confirms the returned assessment of $458,000 for the 2017, 2018 and deemed 2019 taxation years.

RELEVANT LEGISLATION

11Section 1 of the Act states:

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.

12Section 19.(1) of the Act states:

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

13Section 19.2(1) of the Act states:

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.

14Section 40.(17) of the Act states:

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.

15Section 44.(3) of the Act states:

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.

Section 33.1 of the Act states:

33.(1) Change re land omitted from tax roll – The following rules apply if land liable to assessment has been in whole or in part omitted from the tax roll for the current year or for all or part of either or both of the last two preceding years, and no taxes have been levied for the assessment omitted:

1. The assessment corporation shall make any assessment necessary to correct the omission.

2. If the land is located in a municipality, the clerk of the municipality shall alter the tax roll upon receiving notice of the change, and the municipality shall levy and collect the taxes that would have been payable if the assessment had not been omitted.

3. If the land is located in non-municipal territory, the Minister shall alter the tax roll upon receiving notice of the change, and shall collect the taxes that would have been payable if the assessment had not been omitted.

ISSUES

16The issues to be determined in these appeal are:

1. The correct current value of the Subject Property for the 2016 taxation year. Then determine the correct omitted assessment value, effective January 1, 2016; and

2. The correct current value of the Subject Property for the 2017, 2018 and deemed 2019 taxation years.

Description of the Subject Property

17The Subject Property is a one-storey rural detached single-family dwelling (not on water), located at 602 Sturgeon Point Road, in the City of Kawartha Lakes. The Subject Property was built in 2015, with a total building area of 2,008 square feet (“sq. ft.”), and a total lot size of 8.22 acres.

DISCUSSION, ANALYSIS AND FINDINGS

The correct current value of the Subject Property for the 2016 taxation year.

MPAC’s Evidence

18At the beginning of the hearing, Ms. Piggott, Valuation Specialist for MPAC, states that the recommended current values offered at the Mandatory Meeting to the Appellants are privileged information and asked that the Board do not rely on that information. The recommended values were included with the Appellants’ disclosure filed with the Board. No objections were raised by the Appellant and the Board agreed not to rely on the information contained in the Appellants’ disclosure document.

19Ms. Piggott presents a Valuation Report, dated November 13, 2018 (“Valuation Report”) which she prepared and testifies to the information contained in the report.

20Ms. Piggott states that the Subject Property was inspected on January 26, 2017, and confirmed that the measurements, data, and classification are correct.

21In support of current value, Ms. Piggott states that she relies on the Direct Comparison Approach to value and presents an analysis of the sales of three suggested comparable properties which occurred in 2011 to 2012. Ms. Piggott testifies that she had difficulties finding suggested comparable properties with new structure like the Subject Property. She states that the three suggested comparable properties presented are located in the same homogeneous neighbourhood as the Subject Property. The analysis contained both actual and time-adjusted sale prices.

22These three suggested comparable properties are located at 99 Kagawong Road, sold in 2012 for $410,000 (time-adjusted sale price of $401,879); at 110 Pearns Road, sold in 2012 for $336,000 (time-adjusted sale price of $331,664); and at 183 Pleasant Point Road, sold in 2011 for $500,000 (time-adjusted sale price of $511,553). The sale prices reflect a sales range of $336,000 to $511,000.

23Ms. Piggott testifies that approximately 90% of the lot at 99 Kagawong Road is designated as wetlands, which severely limits the use of the land. However, she feels that this suggested comparable property is the most similar to the Subject Property, even though she could not quantify the impact of wetlands on the assessed value. Ms. Piggott submits that 110 Pearns Road is inferior to the Subject Property, because it is older and with a significantly smaller lot; and 183 Pleasant Point Road is superior, because of its significantly larger lot, a higher quality of construction rating and similar structure to the Subject Property.

24These three suggested comparable properties have, on average, a lot size of 28.30 acres; year built 2002; quality rating of 6.5; total building area of 2,172 sq. ft.; and sold at an average sale price of $415,000 (time-adjusted sale price of $415,000). This is compared to the Subject Property with a total lot size of 8.22 acres; built in 2015; quality rating of 6.5; a total building area of 2,008 sq. ft.; and assessed at $412,000 for the 2016 taxation year.

MPAC’s Submissions

25Based on the above analysis, MPAC argues that the current value is $412,000, because it falls within the sales range of the three sales.

Appellants’ Evidence

26In support of current value, the Appellants present five sales of suggested comparable properties. Like MPAC, the Appellants express the same concern about difficulties finding suggested comparable properties with newer structure as the Subject Property.

27These five suggested comparable properties are located at 383 Sturgeon Point Road, sold in 2015 for $340,000 (farm property); 157 Kenrel Road, sold in 2015 for $405,000; 37 Wagar Road, sold in 2014 for $420,000 (farm property); 3051 Pigeon Lake Road, sold in 2015 for $398,000; and 388 Country Lane, sold in 2011 for $375,000. These five sales reflect a sales range of $340,000 to $420,000.

28An analysis of these five sales demonstrates that on average they have a total lot size of 11.4 acres; total building area of 2,084 sq. ft.; quality rating of 6.8, year built 1988; and at a sale price of $388,000. This is compared to the Subject Property with a total lot size of 8.22 acres; built in 2015; quality rating of 6.5; a total building area of 2,008 sq. ft.; and assessed at $412,000 for the 2016 taxation year.

Appellants’ Submissions

29Based on the above sales, the Appellants are of the view that when the suggested comparable properties are adjusted for differences to the Subject Property the current value should be approximately $370,000 ($90,000 original assessment for the lot only + omitted assessment estimated at $280,000).

The correct current value for the Subject Property for the 2017, 2018 and deemed 2019 taxation years.

MPAC’s Evidence

30In support of current value, Ms. Piggott presents five sales of suggested comparable properties in the same homogeneous area as the Subject Property and neighbouring areas. They are located at 255 West Street South, sold in 2014 for $360,000 (time-adjusted sale price of $403,129); 630 Fenel Road, sold in 2015 for $380,000 (time-adjusted sale price of $386,261); 417 DeVitts Road, sold in 2016 for 360,000 (time-adjusted sale price of $337,052); 719 County Road 49, sold in 2016 for $423,000 (time-adjusted sale price of $408,434); and 1930 County Road 8, sold in 2016 for $464,000 (time-adjusted sale price of $445,234). These five sales reflect a sales range of $360,000 to $464,000.

31These five sales have on average a total lot size of 1.41 acres; total building area of 1935; quality rating of 6.5; year built 2002 and an average sale price of $397,000 (rounded). This is compared to the Subject Property with a total lot size of 8.22 acres; built in 2015; quality rating of 6.5; a total building area of 2,008 sq. ft.; and assessed at $458,000 for the 2017, 2018 and deemed 2019 taxation years.

MPAC’s Submissions

32Based on the above analysis, MPAC argues that the current value should be at the upper range of the sale prices at $464,000, because the Subject Property is significantly newer, and with significantly larger lot than these five comparable properties.

Appellants’ Evidence

33The Appellants indicated that the Subject Property is abutting busy roads and is negatively impacted by nuisances associated with these roads on two sides of the property. They also argued that because of the topography of the Subject Property, the lot acts as a conduit for runoff water which results in ponding and backing up of water, especially after heavy rain.

34In support of current value, the Appellants present seven sales of suggested comparable properties. They are located at 383 Sturgeon Point Road, sold in 2015 for $340,000 (farm property); 157 Kenrel Road, sold in 2015 for $405,000; 69 Country Road 121, sold in 2018 for $560,000; 37 Wagar Road, sold in 2014 for $420,000; 3051 Pigeon Lake, sold in 2015 for 398,000; 1814 County Road 8, sold 2010 for $450,000; and 388 Country Lane, sold in 2018 for $645,000. The sale prices of these seven sales range from $340,000 to $645,000.

35An analysis of these seven sales demonstrate that on average they have a total lot size of 9.9 acres; building area of 2,230 sq. ft.; quality of construction 6.86; year built 1986; and sold at an average price of $460,000. This is compared to the Subject Property with a total lot size of 8.22 acres; built in 2015; quality rating of 6.5; a total building area of 2,008 sq. ft.; and assessed at $458,000 for the 2017, 2018 and deemed 2019 taxation years.

Appellants’ Submissions

36Based on the above sales, the Appellants are of the view that when the suggested comparable properties are adjusted for differences to the Subject Property the current value should be approximately $415,000.

Findings on Current Value for 2016 taxation year

37Under s. 44.(3)(a) of the Act, the Board must first determine “the current value of the land.” The best evidence the Board can receive of current value is an arm’s length and market-tested sale of the property on the valuation date or close to it.

38In regard to the difficulties expressed by both MPAC and the Appellants of finding suggested comparable properties with new structure as the Subject Property. The Board accepts their concerns and analyzes the sales of suggested comparable properties by using the sale price ranges, because of the many differences (size, quality, secondary structures, age etc.) to the Subject Property, as opposed to the cost per sq. ft.

39In regard to the Appellants’ argument that the Subject Property is negatively impacted by nuisances associated with busy roads and heavy rain, the Board finds that the Appellants present no quantitative evidence to assist the Board in determining the impact of these nuisances on the assessed value of the Subject Property. Therefore, the Board puts no weight on this argument.

40In regard to the Appellants’ argument that MPAC is not in compliance with their own protocols, because they failed to consider the five major factors (location, lot, living area, age and quality) in assessing the Subject Property, the Board finds that MPAC is in compliance. In reviewing the sales presented by MPAC in support of current value, the five major factors are in fact provided in MPAC‘s analysis for comparison to the Subject Property.

41In regard to the five sales of suggested comparable properties presented by the Appellant, the Board did not rely on the sale at 383 Sturgeon Point Road, sold in 2015 for $340,000 (farm property); 157 Kenrel Road, sold in 2015 for $405,000; 37 Wagar Road, sold in 2014 for $420,000 (farm property); and 3051 Pigeon Lake Road, sold in 2015. The reason being that the sale dates in 2014 and 2015 of these four suggested comparable properties are too far removed from the valuation date of January 1, 2012, to provide any meaningful test of current value. Also, two of the suggested comparable properties are farm properties which are not similar to the Subject Property.

42The remaining sale at 388 Country Lane, sold in 2011 for $375,000 will be included in the Board’s analysis of current value. For the purpose of all current value analyses, the Board relies on the actual sale price.

43In reviewing MPAC’s three sales of suggested comparable properties in support of current value, the sale at 99 Kagawong Road, sold in 2012, was not relied on by the Board, because the lot size (50 acres) of this suggested comparable property is significantly larger than the Subject Property. Although MPAC states that 45 acres (90%) of the lot are designated wetlands, MPAC was not able to quantify the impact on the assessed value of this property for comparison to the Subject Property.

44MPAC’s remaining two sales at 110 Pearns Road, sold in 2012 for $336,000; 183 Pleasant Point Road, sold in 2011 for $500,000; and the Appellants sale at 388 Country Lane, sold in 2011 for $375,000 are considered for current value. These three sales have on average a lot size of 20.65 acres; building area of 2154 sq. ft.; quality rating of 6.8; year built 1992, and sale price ranging from $336,000 to $500,000. The analysis shows that these three suggested comparable properties have a lot size of 20.65 acres; building area of 2,154 sq. ft.; built in 1992 and with a quality rating of 6.8. This is compared to the Subject Property with a total lot size of 8.22 acres; a total building area of 2,008 sq. ft.; built in 2015; quality rating of 6.5 and assessed at $412,000 for the 2016 taxation year.

45Based on this analysis, the Board finds that it is quite likely that the Subject Property would have sold for more than $336,000 and less than $500,000. Therefore, the Board averages these two sale prices ($336,000 + $500,000)/2) to arrive at a current value of $418,000.

Findings on Current Value for 2017, 2018 and Deemed 2019 taxation years

46In reviewing MPAC’s five sales in support of current value. The Board did not rely on the sale at 255 West Street South, sold in 2014 for $360,000, because this sale date is too far removed from the valuation date of January 1, 2016, to provide a true test of current value.

47The remaining four sales at 630 Fenel Road, sold in 2015 for $380,000; 417 DeVitts Road, sold in 2016 for 360,000; 719 County Road 49, sold in 2016 for $423,000; and 1930 County Road 8, sold in 2016 for $464,000 will be considered for current value.

48In reviewing the Appellants’ seven sales of suggested comparable properties, the Board did not rely on 383 Sturgeon Point Road, sold in 2015 for $340,000, because it is a farm property that is not similar to the Subject Property. The Board also did not rely on 69 Country Road 121, sold in 2018 for $560,000; 37 Wagar Road, sold in 2014 for $420,000; 1814 County Road 8, sold 2010 for $450,000; and 388 Country Lane, sold in 2018 for $645,000, because the sale dates (2010, 2014 and 2018) are too far removed from the valuation date of January 1, 2016 to provide any meaningful test of current value.

49The remaining two sales at 157 Kenrel Road, sold in 2015 for $405,000; and 3051 Pigeon Lake, sold in 2015 for 398,000 will be considered for current value.

50In reviewing MPAC’s four sales at 630 Fenel Road, sold in 2015 for $380,000; 417 DeVitts Road, sold in 2016 for 360,000; 719 County Road 49, sold in 2016 for $423,000; 1930 County Road 8, sold in 2016 for $464,000; and the Appellants’ two sales at 157 Kenrel Road, sold in 2015 for $405,000; 3051 Pigeon Lake, sold in 2015 for 398,000. These six suggested comparable properties have on average a lot size of 2.4 acres; building area of 2,136 sq. ft.; year built 1999; quality 6.6 and sales range from $360,000 to $464,000. This is compared to the Subject Property with a total lot size of 8.22 acres; built in 2015; quality rating of 6.5; a total building area of 2,008 sq. ft.; and assessed at $458,000 for the 2017, 2018 and deemed 2019 taxation years.

51Based on the above analysis of these six sales, the Board finds that the Subject Property is likely to have been sold at the higher range of $464,000, because it is newer and with a larger lot size. Therefore, the Board finds that the current value is $464,000.

DECISION

Current Value for 2016 taxation year

52The Board finds the current value of the Subject Property is $418,000 for the 2016 taxation year. The Board finds that this value supports the returned assessment of $412,000.

53The Board confirms the returned assessment of $412,000 and finds the omitted assessment to be $322,000 ($412,000 - $90,000 original returned assessment). Therefore, the Board confirms the omitted assessment of $322,000 effective January 1, 2016.

Current Value for 2017, 2018 and Deemed 2019 taxation years

54The Board finds the current value is $464,000 and this value supports the returned assessment of $458,000. Therefore, the Board confirms the returned assessment of $458,000 for the 2017, 2018, and deemed 2019 taxation years.

2019 DEEMED APPEAL

55An 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.

56Section 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.