Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

April 18, 2019

FILE NO.:

WR 157695

Assessed Person(s):

William James Sofonoff and Darlene Sofonoff

Appellant(s):

Jamie Sofonoff

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”), Region 32

Respondent(s):

Municipality of Greenstone

Property Location(s):

6 Cordingley Beach Road

Municipality(ies):

Municipality of Greenstone

Roll Number(s):

5876-720-001-35100-0000

Appeal Number(s):

3278859, 3232257, 3315193 and 3368443 (deemed 2019 appeal)

Taxation Year(s):

2017, 2018 and 2019 (deemed appeal)

Hearing Event No.:

696280, 708964 and 709264

Legislative Authority:

Section 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard:

May 8, 2018, November 21, 2018 and December 17, 2018 by telephone conference call

APPEARANCES:

Parties

Representative

James Sofonoff

Self-represented

MPAC

Tom Whalley

Municipality of Greenstone

Jack Kuzminski and Lorne Christenson

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property, located at 6 Cordingley Beach Road, had an assessment of $153,000 for the 2017 taxation year. Effective September 7, 2017, MPAC applied a supplementary assessment of $35,000 reflecting the removal of a nominal unfinished allowance on the dwelling that was reflected in the 2017 assessment and the addition of a detached garage. The assessment for the 2018 and the deemed 2019 taxation years was the resultant $188,000 when the 2017 assessment and the September 7, 2017 supplemental assessment were applied.

2James Sofonoff (the “Appellant”) believed these assessments were too high and filed appeals. The Appellant submitted that a current value of approximately $130,000 is correct when comparisons are made between his property and other properties in the Municipality of Greenstone.

3For the 2017 taxation year, MPAC returned a value of $153,000, reflecting the original lot value and a 1,808 square feet (“sq. ft.”) bungalow dwelling. This value took into account a 10% unfinished allowance that MPAC applied, pending completion of flooring and other interior finishes. A supplementary assessment, made under s. 34 of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”), in the amount of $35,000 was added, effective September 7, 2017. The supplementary assessment included $19,000 for a new detached garage, and $16,000 for the removal of the unfinished allowance previously applied by MPAC. There is no dispute between the parties as to the effective date of the supplementary assessment.

ISSUE

4There are four questions the Assessment Review Board (“Board”) must answer in making its determination:

1. What is the current value of the subject property for the 2018 and the deemed 2019 taxation years?

2. What is the current value of the subject property for the 2017 taxation year?

3. What is the value of the supplementary assessment applied by MPAC, effective September 7, 2017?

4. Do the current values determined require reduction for the purposes of equity when reference is made to the assessments of similar properties in the vicinity?

DECISION

5The Board finds the current value of the subject property for the 2018 and the deemed 2019 taxation years is $195,000, in the Residential property class.

6The Board further finds that there is evidence to support a reduction in this amount in order to make it equitable with the assessments of similar lands in the vicinity. Accordingly, the assessment of 6 Cordingley Beach Road for the 2018 and 20019 taxation years is reduced from $188,000 to $179,000 in the Residential property class.

7The Board finds that the value of the supplementary assessment, effective September 7, 2017 is reduced from $35,000 to $24,000 in the Residential property class.

8The Board also finds the current value of the subject property for the 2017 taxation year is $155,000, in the Residential property class. As MPAC is not seeking an increase in the assessment returned, the assessment for the 2017 taxation year is confirmed at $153,000.

LEGISLATION

9In making its determination of these appeals, the Board must consider the relevant sections of the Act.

10Section 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.

11Section 19.(1) of the Act states:

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

12Section 34 of the Act states:

34 (1) Supplementary assessments to be added to tax roll. – If, after notices of assessment have been given under section 31 and before the last day of the taxation year for which taxes are levied on the assessment referred to in the notices,

(a) an increase in value occurs which results from the erection, alteration, enlargement or improvement of any building, structure, machinery, equipment or fixture or any portion thereof that commences to be used for any purpose;

(b) land or a portion of land ceases,

(i) to be exempt from taxation,

(ii) to be farm lands the current value of which is determined in accordance with subsection 19 (5),

(iii) to be conservation land the current value of which is determined under subsection 19 (5.2),

(iii.1) to be land in the managed forests property class the current value of which is determined under subsection 19 (5.2) or (5.2.1),

(iv) to be land the current value of which is based on current use under regulations made under subsection 19 (2), or

(v) to be classified in a subclass of real property;

13Section 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.

What is the Current Value of the Subject Property?

MPAC’s Evidence

14MPAC submitted a valuation report that compared the subject property with six properties that sold between November 2012 and August 2017. The time adjusted sale (“TAS”) values of these sales range from $94,348 to $354,476. MPAC freely admitted the challenge of determining current value by the direct comparison approach in this part of the Province, owing to the sparse population and the low number of sales in any given time period.

15Under cross-examination, MPAC was asked about the distinction between waterfront property and indirect waterfront property as it related to value. Mr. Whalley responded that there is no sales data to suggest that these two waterfront property types are valued in the market place any differently. In doing so, he acknowledged that in many parts of the Province, as pointed out by the Appellant, properties with direct ownership along a lakefront command higher prices that when the lake is separated from the property by a roadway, but that is not the case in Greenstone.

16The characteristics of the six properties in MPAC’s sample are shown in Table A.

TABLE A

Effective Age

Dwelling Area/ Lot area

Distance from subject

TAS price / Sale date

Closest town

Subject Property

4

1,808 sq. ft. / 0.98 acre

N/A

N/A

Nakina

1

17Wildgoose

37

1,604 sq. ft. / 0.51 acre

66 km

$211,720 / May 2014

Geraldton

2

16 Margo

39

1,250 sq. ft. / 0.97 acre

51 km

$178,498 / Aug. 2017

Longlac

3

11 McIntosh

18

1,344 sq. ft. / 1.26 acres

52 km

$293,001 / July 2014

Geraldton

4

3 Popowich

29

1,008 sq. ft. / 1.23 acres

59 km

$236,958 / Sept. 2016

Geraldton

5

21 McIntosh

28

1,344 sq. ft. / 1.39 acres

51 km

$354,476 / Nov. 2011

Geraldton

6

214 Eagle Nest

27

714 sq. ft. / 1.28 acres

10 km

$94,348 / June 2014

Nakina

17MPAC submitted that the most comparable of the properties in its sample are Sales 4 and 1. Sale 4 has a smaller main floor, but includes a finished basement area. It sits on a similarly sized lot. The travel time from Sale 4 to the closest town (Geraldton) is similar to the driving time from the subject property to Nakina.

18Sale 1 is considered by MPAC to be inferior to the subject property, owing to its age. It has 1,606 sq. ft. of living area as compared to the subject property’s 1,808 sq. ft., which is the closest comparable in that characteristic. MPAC testified that the driving time from Sale 1 to Geraldton is approximately twice as long as the travel time from the subject property to Nakina.

19MPAC testified the TAS price range of these two best comparable properties is a good indication of the current value of the subject property, and that $188,000 is therefore reasonable.

20MPAC’s evidence indicated that approximately $35,000 was added to the assessment to account for an unfinished allowance that had been applied for January 1, 2017. This amount also included the value of a detached garage that had been constructed prior to September 7, 2017. MPAC submitted that the unfinished allowance was approximately 10% of the value of the property as it would have been valued when complete. This amount was approximately $16,000. The remaining $19,000 added in September 2017 was for the detached garage. This accounts for the differences in the 2017 and the 2018 / the deemed 2019 assessments.

Appellant’s Evidence

21The Appellant’s concerns about the assessments returned by MPAC focused on two elements. The first was the comparability of the properties used by MPAC in its valuation. The second was the assessment of the subject property as having indirect access to waterfront. The Appellant testified that the subject property has a municipal road that lies between the subject property and Cordingley Lake. He believes therefore, it cannot be compared to waterfront properties that have no such intervening use. Lastly, the Appellant took issue with the value attributed to the unfinished allowance applied to the property by MPAC.

22The Appellant pointed out that all of the suggested comparable sales used by MPAC were on different lakes. He also indicated that many of them were in closer proximity to Geraldton than Nakina, near where the subject property lines. According to the Appellant, Nakina has fallen on hard times in recent years and that the population has dwindled and that there are no basic amenities such as a pharmacy or grocery store there. This requires residents in this area to make a longer trip to Geraldton to do weekly shopping. He submitted that this is a difference between the two communities that would indicate lower values in Nakina.

23Accordingly, the Appellant relied on comparisons with two properties in Nakina that have sold near the valuation day. These properties are located at 142 Northwood Drive and 144 Northwood Drive. The Appellant used these sales because the properties have frontage on a tributary to the nearby lake in Nakina. He submitted that this type of frontage would be more comparable to the frontage of the subject property than the properties used by MPAC as MPAC’s comparable properties all have direct frontage on Cordingley Lake. His two suggested comparable sales in Nakina do not have lake frontage, but do have access to a tributary to the lake. The Appellant considers these to be comparable as a result.

24Number 142 and 144 Northwood Drive sold for $38,500 and $29,500 respectively.

25The Appellant also submitted an appraisal from Nancy Kyro, a local real estate broker, with an opinion of the market value of the subject property. The value put forward by the broker was $130,000. The value was based on comparisons of the subject property to five properties that sold between February 2017 and October 2017. The date of the valuation was October 3, 2017. No adjustment for the change in value between the valuation day and the appraisal was made. The characteristics of the five comparable properties in the appraisal were restricted to building type, location, site area and waterfront ownership.

26The Appellant also submitted documents that show the value of the flooring that was undertaken after the roll was returned for 2017. He also agreed that some additional interior finishes were completed in the same time frame. He submitted that the flooring cost just under $3,000 and that he installed it himself. He testified that aside from some other minor tasks, this was the extent of the work required to bring the dwelling up to the measure of ‘complete’.

27The Appellant submitted no alternative cost for the added, detached garage.

Board’s Analysis

28The best evidence of current value is a sale of the subject property that occurred on or near the applicable valuation day. When there is no such sale, the best evidence is comparison of the subject property to comparable properties that sold in proximity to the valuation day. For the 2017, 2018, and the deemed 2019 taxation years, the valuation day is January 1, 2016.

29MPAC submitted a number of properties that had some similarity to the subject property. MPAC’s position was that the best comparable sales indicated a value in the $200,000 plus range. However, the scattered geography represented by the sales complicates any calculation of current value based on location. Neither party submitted any evidence as to the impact of location in this area of the north on property value. Instead they left it to the Board to decide.

30The Board accepts the following as fact:

• Direct waterfront and indirect waterfront lots are not valued differently; this was testified by MPAC and was not refuted by the Appellant with any evidence;

• Size of structure or land area do not have a direct impact on property value;

• Location and proximity to towns or villages affects property values and the evidence suggests that properties in proximity to Geraldton are valued higher than properties in proximity to Nakina;

• The value of the garage of $19,000 is not in dispute; and

• There is no evidence to support a value of $16,000 for the unfinished structure allowance. The Board views that figure as being a nominal percentage applied at the time of the roll return for 2017.

31The Board considers all of the properties in evidence to be informative as to value of the subject property, but not determinative. The Board has no doubt about the credentials of the MPAC Assessor, or the appraiser/broker enlisted by the Appellant.

32Accordingly, the Board finds that the best evidence of current value for the 2018 and the deemed 2019 taxation years is the range determined by comparison to MPAC’s Sale 2 on Margo Lake Road and Sale 1 on Wildgoose Lake Road. These two properties represent the highest value of the two inferior properties and the lowest value of the four superior properties in MPAC’s selected comparable properties, as compared to the subject property.

33The Board gives Ms. Kyro’s opinion of $130,000 less weight as evidence of the current value because her report lacked important detail about the comparable properties she used to determine the value of the subject property.

34The mean of the best two comparable properties in MPAC’s sample is $195,109. Accordingly, the Board finds the current value of the subject property on January 1, 2016, is $195,000 (rounded).

35The value of the garage was not in dispute at the hearing. It was completed after January 1, 2017 and the Board is satisfied from the submissions that its value was not assessed on January 1, 2017.

36MPAC places a value of $16,000 on the unfinished allowance applied for the 2017 taxation year. The Appellant disputed that figure, indicating that flooring was the largest of this allowance and that it only amounted to $3,000 in value. MPAC did not refute this assertion, except to say that if that were the case, the property to date would have been under-assessed because too much value had been attributed to the allowance.

37The Board finds that the garage has a value of $19,000. The Board finds that the value of the unfinished allowance is $5,000. This is a nominal amount, but the Board heard that $3,000 had been spent on the purchase and delivery of flooring. That flooring would have had to be installed. The Appellant also submitted that there were other minor interior finishes that had been completed in the same time frame. No specific value was submitted. The Board views an amount of $5,000 to be reasonably representative of the cost of the work completed.

38Accordingly, the Board finds the value of the supplementary assessment, effective September 7, 2017 was $24,000.

39For the 2017 taxation year, the Board finds the best evidence of current value, as of January 1 2017, before the supplementary assessment is $171,000 (2018 / the deemed 2019 assessment minus the $24,000 value of the supplementary assessed determined).

Is a reduction in the current value necessary to achieve equitable assessment when reference is made to the assessments of similar properties in the vicinity?

40The Appellant did not make a submission on the question of equity of assessment.

41MPAC submitted an equity analysis that compared the TAS value of 30 single family dwellings in the vicinity of the subject property with their corresponding 2017 assessments. All 30 properties are described as being either ‘single family detached on water’ or ‘seasonal/recreational dwelling – first tier on water’.

42Comparisons of such assessments and TAS values are a common means of determining if similar properties in the vicinity are equitable assessed. The comparison of these assessments to TAS values is called the Assessment to Sale Ratio (“ASR”). The range of ASRs in the sample was from 0.468 to 1.375, with a median of 0.943.

43The median ASR, according to MPAC means that properties that are similar to the subject property, in the same vicinity, are assessed at approximately 94.3% of their current value as determined through sales. MPAC’s analysis stated that a resultant median ASR that is between 0.9 and 1.1 is considered to mean current values are representative of assessment and therefore, no adjustment is required. This range was drawn from the standards of the International Association of Assessing Officers (“IAAO”).

Board’s Analysis

44The concept of reducing the current value determined to make the subject property’s assessment equitable with that of similar properties in the vicinity requires the Board to change a correct assessment finding to one that is incorrect to make it fair and equitable. Adjustments for this purpose cannot therefore be made without compelling evidence to do so.

45The Appellant submitted that the assessments of MPAC’s comparable properties indicate that assessments are below their corresponding current values and a downward adjustment to the current value determined would be necessary.

46MPAC’s equity analysis indicates that, when the assessments of 30 similar properties in the vicinity of the subject property are compared with their TAS values, the result shows that properties are generally assessed below their current value. MPAC relies on a median ASR to decide if the current value of a property should be reduced to arrive at an assessment that is equitable.

47In making its determination of any equity reduction, the Board must be convinced, by the best evidence available that the reduction is warranted. The Board finds that the mean ASR using all properties in evidence is the best evidence of whether or not a reduction in current value is required:

• Mean ASR – 0.920

• Standard Deviation – 0.207

• 95% Confidence Range – 0.074

• Low End of the Confidence Range – 0.846

• High End of the Confidence Range – 0.994

48These results indicate that it is likely that similar properties in the vicinity are generally assessed below their current value. Based on this sample, the Board can be 95% sure that the true average level of assessment of similar properties in the vicinity is between 84.6% and 99.4% of their current values. That is strong evidence that similar properties in the vicinity are, on average, assessed below their current values. Therefore, the Board finds the current values determined should be reduced by 8% for the purposes of equitable assessment.

49Accordingly, the current value determined for the 2018 and the deemed 2019 taxation years of $195,000 is reduced by a factor of 0.920, for an assessment of $179,400 ($179,000, rounded.)

50The assessment for the 2017 taxation year is determined by deducting the value of the supplementary assessment from the equitable assessment for the 2018 and the deemed 2019 taxation years of $179,000 for an equitable assessment of $155,000.

CONCLUSION

51The Board finds the current value of the subject property for the 2018 and the deemed 2019 taxation years is $195,000, in the Residential property class.

52The Board further finds that there is evidence to support a reduction in this amount in order to make it equitable with the assessments of similar lands in the vicinity. Accordingly, the equitable assessment of 6 Cordingley Beach Road for the 2018 and the deemed 20019 taxation years is reduced from $188,000 to $179,000.

53The Board finds that the value of the supplementary assessment, effective September 7, 2017 is $24,000; reduced from $35,000 in the Residential property class.

54The Board also finds the current value of the subject property for the 2017 taxation year is $155,000, in the Residential property class. As MPAC is not seeking an increase in the assessment returned, the assessment for the 2017 taxation year is confirmed at $153,000, in the Residential property class.

2019 DEEMED APPEAL

55An appeal for the 2018 taxation year is presently before the Board. Section 40.(26) of the 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.