Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 16, 2019

FILE NO.: WR 155093

Assessed Person(s): 1127721 Ontario Limited

Appellant(s): 1127721 Ontario Limited

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

Respondent(s): Township of Mattawan

Property Location(s): Mattawa Con 11, PT Lot 30 and 31.

Municipality(ies): Township of Mattawan

Roll Number(s): 4819-000-001-51650-0000

Appeal Number(s): 3262172 and 3314214

Taxation Year(s): 2017 and 2018

Hearing Event No.: 702368

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

Heard: August 15, 2018 in Mattawa, Ontario

APPEARANCES:

Parties	Representative
1127721 Ontario Limited	Paul Goodridge
MPAC	Blair Adams
Township of Mattawan	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

BACKGROUND

11127721 Ontario Limited is the owner of Mattawa Con 11 PT Lots 30 and 31 RP 36R10524, (the “Subject Property”), which is an Island under single ownership and classified as residential property. The island is located in the Ottawa River, and is 17.46 acres in size. It is uninhabited. It was not always an island, but after the building of the Otto Holden Dam near Mattawa, the Ottawa River was flooded and created this particular parcel, known locally as “Dupras Island”. However, because of its origins and location, 1127721 Ontario Limited only owns the interior of this island, while the Ontario Power Generation Corporation (“OPG”) owns the shoreline or flood plain of this island. This makes it unique: a single owner island property without waterfront.

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 $184,000. Since the appeal process began, MPAC has reduced its opinion of value from $184,000 to $153,000 to $93,000. Consequently, the Board must determine the value of the Subject Property on January 1, 2016 for the 2017 to 2018 taxation years (“current value”).

41127721 Ontario Limited (the “Appellant”) has filed appeals for taxation years 2017 to 2018 with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. It is its position that MPAC’s assessment of current value is too high and that the correct current value is $3,650. At this hearing, MPAC takes the position that its assessed value should be changed to $93,000.

5Pursuant to s. 40(11) of the Act, the Township of Mattawan is a party to this proceeding. However, the Township did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the Township’s behalf.

6Section 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 argued that an equitable reduction was required.

7At 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 $9,700.

Relevant Legislation and Rules

8The 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.

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:

1. For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005.

2. For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.

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.

Issues

9The issues to be determined on this appeal are: the correct current value of the Subject Property for the taxation years 2017 to 2018; and if the subject property is equitably assessed

Discussion, Analysis and Findings

What is the correct current value of the Subject Property for the taxation years 2017 to 2018?

MPAC’s Evidence

10Blair Adams, a Property Valuation Analyst for MPAC, represented MPAC and gave the evidence, consisting of his oral testimony, his Valuation Report dated February 27, 2018, plus his Equity Analysis Report.

11Mr. Adams began his testimony by indicating that he had amended the current value of the Subject Property after determining that it had not received the appropriate vacant land adjustments that other properties in the vicinity received. He adjusted the current value from $184,000 to $93,000. Also included in the calculation was the fact that the boat launch and public access point that would have been used to access the property was closed and labelled “No Access”, leaving the closest boat access some 23 to 40 kilometres away from the Subject Property.

12Mr. Adams described the Subject Property as being a single owner island in the Ottawa River. However, the land has only relatively recently become an island following the flooding of the Ottawa River after the construction of the Holden Dam. Because it is surrounded by water, it is a property “on water”. In addition, the shoreline of the entire island is owned by Ontario Power Generation (“OPG”). According to Mr. Adams, the owners have the advantages of a waterfront property. He postulated that the owners of the land would be able to use it for recreational purposes, and said that as long as they used non-permanent docks, they could make use of the OPG lands to access their own lands. Mr. Adams did not provide evidence to prove this assertion.

13MPAC uses the direct sales method of determining value in respect of residential lands. Mr. Adams explained the necessity of adjusting the prices of comparable properties to January 1, 2016, which is the valuation day for the current assessment cycle. He introduced his sales ratio trend analysis study, which records price changes over time and breaks them down to month-by-month time adjustment factors (“TAF”). Using the TAF, Mr. Adams can calculate the value of similar residential properties sold before or after the valuation day.

14Mr. Adams used three property sales from the vicinity, which were all vacant residential lands on water. All three properties had private road access; none are islands. They are all located on a river or other watercourse. None of these proposed comparable properties has hydro available. All three properties have “no waterfront ownership”. The chart below sets out the dimensions of the properties and the relevant sales information, including time adjusted sales prices.

MPAC’s Proposed Comparable Sales

Property	Area	Area Treed	Sale Date	Sale Price	Time Adjusted Sale Price
Subject Property	17.46 acres	76% - 100%
Marion Road	18.53 acres	76% - 100%	12/06/2013	$100,000	$110,208
Snake Creek Rd.	3.98 acres	26% - 50%	01/05/2015	$130,000	$132,995
Snake Creek Rd.	3.14 acres	26% - 50%	09/26/2014	$130,000	$135,283

15Of these sales, Mr. Adams noted that the Snake Creek properties are not far from the Subject Property and, like it, do not have ownership of the shoreline. OPG owns the shoreline there as well. These two properties are accessible via a gravel road. The Marion Road property abuts a travelled road. Based on these three sales, and taking into account the unopened road allowance across the Subject Property, which the comparable properties do not have, Mr. Adams arrived at a current value of $93,000. Mr. Adams did not break it down any further, and did not specify how much of the reduction was based on the comparable sales and how much was based on the unopened road allowance.

MPAC’s Submissions

16Relying on its evidence, MPAC submits that the correct current value for the taxation years 2017 to 2018 is $93,000.

Appellant’s Evidence

17Paul Goodridge represented the Appellant. The following persons testified on behalf of the Appellant: Mr. Goodridge and Ivan Boissonneault. Mr. Goodridge is a friend of Mr. Boissonneault’s, and appeared in that capacity and not as a legal representative. However, Mr. Goodridge is also an Ontario Land Surveyor and professional land use planner with experience primarily throughout northeastern Ontario. He personally surveyed the land in question and he provided the Board with a copy of that Plan of Survey. Mr. Goodridge was not seeking certification as an expert witness due to his friendship with Mr. Boissonneault.

18Mr. Goodridge gave a short history of the Subject Property. It was part of the original patent of 595 acres, which was purchased in its entirety by the Appellant Corporation in 1995 for $330,000. A portion of the original parcel was transferred to Mr. Boissonneault and Susan Boissonneault in March, 2001. The Appellant documented this history with abstracts from the Registry/Land Titles office.

19The Holden Dam was built in the early 1950s and started operation in 1953. The Appellant provided a copy of a Plan showing the change in the Ottawa River as a result of the flooding occurring after construction of the dam. Mr. Goodridge states that the flooding occurred up to a kilometer away from the shores of the Subject Property, which ultimately became an island in the Ottawa River. Because the Holden Dam is a power generation facility, there is a large degree of control over the water levels by OPG. This results in fluctuations as much as 9 feet in the area surrounding the Subject Property, Mr. Goodridge advises. Mr. Goodridge also testified that the landowners with property bordering the Ottawa river in this vicinity do not have riparian rights – in other words, when the water levels decrease, creating more exposed land, the boundaries of the lands abutting the flood plain do not change. An increase in the OPG lands due to reduction of the water levels does not give the abutting landowners any more land or rights to land than they had under the initial agreement with OPG.

20The Appellant also provided a copy of a “Property Index Map” showing the Subject Property and lands in the vicinity, including the three comparable properties proposed by MPAC. The three properties have road access, something the Subject Property does not share.

21Mr. Goodridge surveyed the Subject Property in 1996, and provided a copy of the “Plan of Survey of Part of Lot 30, Concessions 10 & 11 and Part of Lot 31, Concession 10, Township of Mattawan”, dated August 31, 1998, that he produced at that time. The plan of survey shows the flood plain similar to a shore road allowance all around the island, and delineates the Appellant’s property, along with the road allowance which bisects the entire property from north to south between Lots 30 and 31.

22Mr. Goodridge also introduced a copy of an e-mail dated March 8, 2018 from Rob Gabourie to Mr. Boissonneault on the issue of leases from the OPG. Mr. Gabourie wrote that he spoke with Mike Humphries, of the OPG Real Estate Services by phone, and when he inquired about leasing the portion of OPG land separating his lot from the river, received this response: “He said this option was not in place for our area”. Mr. Gabourie’s property is identified as being Con 10, Pt. Lot 31, RP 36R12003 Parts 13 and 14. Mr. Goodridge speculated that leases may eventually become available, but that might be with a cost. However, at the present time, leasing the shore does not seem to be an option open to the Appellant.

23Mr. Goodridge, in his written submission, notes that licences are sometimes available from OPG allowing the licencees to be on OPG property. However, they are prohibited from running transmission lines or cables or other forms of electrical generation over OPG lands, leaving the landowner the option of wind or solar power. The licences can be revoked at will by OPG. In addition, there may be costs associated with obtaining a licence, and one of those costs is that landowners must prove they carry a minimum of one million dollars in liability insurance. He emphasized that, without a nearby venue for launching a boat, it would be a difficult and expensive proposition to make regular use of the island or to attempt to build on it.

24The Appellants also provided evidence of two proposed comparable sales of properties which are affected by the hydro easements. Property 1 (SRO Part 27, Con 10, Pt 1, 36R13893) sold on May 11, 2016 for $69,000, is on the Ottawa River on Lot 28, Concession 9 and 10. This property appears to be approximately four acres in size. The second property (Lot 1, Plan36M693, City of North Bay), which appears from the property index map included to be approximately seven acres in size, sold for $136,500, in October, 2017. Under cross examination, Mr. Goodridge confirmed that neither of the proposed comparable properties is in proximity to the Subject Property, with Property 1 being in a different municipality and the other being in North Bay. Mr. Goodridge provided these two examples of landlocked properties. He argued that, where the property in North Bay (Property 2) sold for $136,500, with North Bay waterfront, then the Subject Property far from a large community like North Bay cannot be worth as much as $93,000 when it is completely inaccessible. The first sale, according to Mr. Goodridge, is only 80% of the current value given to the Subject Property by MPAC, and yet it is not entirely inaccessible like the Subject Property

25Mr. Goodridge also described three properties found by Mr. Boissonneault in his searches which are much larger rural properties, not on water, but in the same municipality as the Subject Property. The properties range in size from 88 to 96 acres. They are vacant lands without development and also, like the Subject Property, not accessible by road. Like the Subject Property, these parcels are landlocked. They have not been recently sold, but showed assessed values between $19,000 to $19,400. The average value of these lands per acre is calculated to be $209, based on the assessments.

Appellants’ Submissions

26Relying on its evidence, the Appellant submits that the correct current value for taxation years 2017 to 2018 is $3,650, which is 17.46 acres multipled by by $209 per acre rounded.

27The Appellant takes the position that the Subject Property is inaccessible, and that its value should reflect that. While OPG is the owner of only a small portion of Dupras Island, it is a privately held corporation, not a governmental agency, and as such can choose to change policies at any time. While the Province is a shareholder in the corporation, the Province can choose to divest itself of its shares at any time. As such, the value assigned by MPAC to this 17- acre island is “statistically inaccurate and unreliable.”

28The Appellant notes that all five proposed property sales put forward by both MPAC and the Appellant are properties accessible by road. This is the distinguishing feature that separates the Subject Property from the proposed comparable properties. The Appellant submits that he Subject Property is truly inaccessible while the others are not.

Findings on Current Value

29Bearing in mind that current value is the amount that a willing buyer would pay a willing seller for land, the best gauge of value is the amount paid for the Subject Property in a transaction occurring near the valuation day, January 16, 2016. In a case such as this one, where no such sale took place, the usual preferred way to estimate the value on valuation day is to find sales of similar properties in similar locations with similar features, attributes and liabilities. The Subject Property is very unique, which makes the process more challenging.

30The challenge is to determine what a buyer would have paid for the 17.46 acre parcel in the middle of the Ottawa River, lacking waterfront and virtually inaccessible, in January, 2016. Because OPG owns the perimeter of island, its uses are extremely limited. Were the Appellant to sell the lands, a future buyer purchases at great risk because there are no guarantees what policies the OPG will create or enforce in respect of their lands. That limits the value that anyone can put on the Subject Property.

31MPAC has speculated that the property could be used so long as appropriate licences are applied for and granted and insurance obtained in accordance with OPG’s potential requirements. However, this argument ignores the following important facts:

(a) the property is landlocked and any potential purchaser will be faced with the same serious and potentially changeable rules or policies governing the abutting OPG shore property;

(b) access is physically and economically difficult given the closing of the only access point within a distance of up to 40 km.;

(c) building on the land is virtually impossible without access to electrical power, which is clearly prohibited and which would only be available using solar power, wind power or a fossil-fuel-operated generator. Given the physical logistics created by the lack of boat access, it is difficult to imagine how a potential purchaser would be attracted to this particular parcel of land, even at a low price.

32The Board notes that “landlocked” properties are traditionally valued for much less than accessible properties, even water access only properties. In the 2016 decision by Member D. Weagant called Petersen v MPAC Region 32, [2016] CanLII 67440, the Board recognized the impact on value of significant regulated prohibitions against development – in that case involving a Provincially Significant Wetland in Thunder Bay area known as Williams Bog. The Board found that the restrictions made this landlocked parcel completely incapable of development of any kind. In that case, the Board reduced the value from $8,200 to $500 for the 2016 taxation year.

33The Dupras Island case is similar in that the Subject Property is entirely landlocked without legal access except perhaps by air. Boat access was possible when a landing was made available to the public near the Holden Dam, but that access point has been closed. Furthermore, boat access requires trespass on OPG property to access the Subject Property, and with policy restrictions in place from OPG, there is no reasonable place to leave a boat while on land. While this property is theoretically capable of development (unlike the Williams Bog property), practicality and economic feasibility mitigate against any form of development or use.

34The only evidence of similar properties which are clearly not accessible was provided by the Appellant and included the roll numbers of three vacant lands that were landlocked. They were assessed for approximately $209 per acre. There was no recent sales evidence.

35In fact, the only sales evidence available of a completely landlocked property is the evidence provided by the Appellant regarding its purchase of the Subject Property as part of a larger parcel. The evidence is that in 1995 the Appellant purchased 595 acres including Dupras Island for $330,000, or $554.62 per acre. The Appellant has visited the land on two occasions; otherwise it has not been used.

36Clearly, in 1995 a willing buyer purchased this property for $9,683.67, and that buyer was the Appellant. While land values have gone up since 1995, increases in value are related to utility. Landlocked properties do not generally go up in value if they are incapable of being developed. Therefore, in the present case, the best evidence of value before the Board is the price paid by the Appellant, and that is therefore the current value of the land. The current value is rounded to $9,700.

Issue No. 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

37MPAC’s equity evidence consisted of the Equity Analysis Report. Mr. Adams testified that equity is determined by looking at a sufficient number of property sales and calculating the assessment-to-sale ratios (“ASR”) of the property sales. The lands must be similar in all points of comparison. MPAC selected thirty properties from a very large vicinity from the Ottawa River to North Bay. The most effective means of determining the accuracy of MPAC’s assessment of the Subject Property is to look at its accuracy over 30 similar property sales located in the vicinity of the Subject Property. While the assessment to sales ratios (“ASR”) vary widely, the median ASR is 0.952 and the mean ASR is 1.003, both indicating an acceptable range of the level of appraisal.

38A second part of the calculation involves computing the Coefficient of Dispersion (“CoD”) which measures the consistency of assessments relative to their current (sale) value. In this case, MPAC strives for a percentage deviation from the median ratio of no more than 25 for vacant land or 20 for rural or recreational land. The CoD in this case was 29.9, which means that it indicates not very much accuracy in the equity analysis.

39The Appellant challenged the equity analysis by pointing out that there must be similarity between the sales used for the equity analysis and the Subject Property. For example, did all thirty properties in the Equity Analysis have road access? Are any of the properties water access only, and, if so, are they located in the Ottawa River or another water body which freezes in the winter? Did the sample include OPG lands? MPAC did not have answers for these questions and conceded that this equity analysis study was a poor example.

MPAC’s Submissions

40Relying on its evidence, MPAC submits that an equitable reduction of the current value for the 2017 to 2018 taxation years is not required.

Appellant’s Evidence

41Aside from challenging MPAC's’evidence on the issue of equity, the Appellants did not introduce any further evidence relating to the issue, but argued that MPAC’s evidence on this issue was statistically flawed. The CoD result was completely out of range, which was further evidence of the inaccuracy of that study they submitted.

Appellants’ Submissions

42The Appellant submits that that an equitable reduction is required and the current value for the 2017 to 2018 taxation years should be reduced to $3,650.

Findings on Equity

While MPAC’s equity analysis had a poor result in respect of the coefficient of dispersion, the level of appraisal was acceptable. No other evidence was presented which would lead to a different analysis. The Board finds that the current value does not require adjustment on the ground of equity.

DECISION

43The correct current value of the Subject Property is $9,700 for the 2017 and 2018 taxation years. The Board reduces the assessment from $184,000 to $9,700 for the 2017 and 2018 taxation years.

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