Driedger v. Municipal Property Assessment Corporation, Region 27, 2019 CanLII 44232

Assessment Review Board

Issue Date: May 14, 2019 File No.: WR 159299

Assessed Person(s): Dennis Abram Driedger, Karen Anne Driedger, A. Driedger Farms Inc. Appellant(s): Dennis Abram Driedger, Karen Anne Driedger, A. Driedger Farms Inc. Respondent(s): Municipal Property Assessment Corporation ("MPAC") Region 27, Town of Leamington

Property Location(s): Mersea 5 Road, Mersea Road 6, Mersea 6 Road, Mersea 6 Road, Mersea Road 12 East, Essex Road 37 Municipality(ies): Town of Leamington

Roll Number(s):

• 3706-670-000-00200-0000;
• 3706-670-000-00400-0000;
• 3706-700-000-00700-0000;
• 3706-700-000-00710-0000;
• 3706-700-000-01900-0000; and
• 3706-740-000-01900-0000.

Appeal Number(s):

• 3318155 and 3367369 (deemed 2019 appeal)
• 3318156 and 3367414 (deemed 2019 appeal)
• 3318157 and 3367415 (deemed 2019 appeal)
• 3318158 and 3367233 (deemed 2019 appeal)
• 3318159 and 3367278 (deemed 2019 appeal)
• 3318160 and 3367107 (deemed 2019 appeal)

Taxation Year(s): 2018 and 2019 (deemed appeals) Hearing Event No(s).: 711069, 711070, 711071, 711072, 711073, and 711074

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

Heard: March 18 and 19, 2019 in Leamington, Ontario

APPEARANCES:

Parties	Representative
Dennis Driedger, Karen Anne Driedger and A. Driedger Farms Inc.	Dennis Driedger
MPAC	Jason Holmes
Town of Leamington	Laura Rauch

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS AND DAN WEAGANT

INTRODUCTION

1At the outset of the hearing, the parties each provided an opening statement whereby they characterized the issues in dispute. The Parties subsequently agreed that the issues in dispute in all six appeals are the same and that the six scheduled hearings and the subject properties could be considered jointly.

2Accordingly, the Board chose to hear the evidence of all six properties simultaneously, in order to render a decision that could apply to each appeal.

3Section 40.(26) of the Assessment Act, R.S.O. 1990, c. A.31, (the "Act") states 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 did not dispose of the 2018 appeal before March 31, 2019. For that reason, this decision also applies to the 2019 taxation year.

4The Board needs to make two decisions in these appeals. Firstly, the Board must determine the current value of Mersea 5 Road, Mersea Road 6, Mersea 6 Road, Mersea 6 Road, Mersea Road 12 East, Essex Road 37 (the "subject properties"). Once the current value is determined, the Board must then decide, when reference is made to the assessments of similar properties in the vicinity, if the value should be reduced to be equitable.

DECISION

5The Board finds the current values of the subject properties are as follows:

Property No.	Roll Number	Current Value
1	3706-670-000-00200-0000	$709,000
2	3706-670-000-00400-0000	$298,000
3	3706-700-000-00700-0000	$524,000
4	3706-700-000-00710-0000	$368,000
5	3706-700-000-01900-0000	$661,000
6	3706-740-000-01900-0000	$721,000

6The Board also finds that there is evidence to indicate reductions in these values are necessary for the purposes of equitable assessment, when reference is made to the assessments of similar properties in the vicinity.

7Therefore, the Board finds that the assessments of the subject properties are reduced as follows:

Property No.	Roll Number	From	To
1	3706-670-000-00200-0000	$804,000	$565,000
2	3706-670-000-00400-0000	$286,000	$174,000
3	3706-700-000-00700-0000	$491,000	$295,000
4	3706-700-000-00710-0000	$391,000 (2018) $363,000 (2019)	$207,000
5	3706-700-000-01900-0000	$609,000	$389,000
6	3706-740-000-01900-0000	$462,000	$344,000

all in the Farm property class for, the 2018 and the deemed 2019 taxation years.

THE LEGISLATION

8The relevant sections of the Act are as follows:

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.

2. (1) Assessment of Easements – Where an easement is appurtenant to any land, it shall be assessed in connection with and as part of the land at the added value it gives to the land as the dominant tenement, and the assessment of the land that, as the servient tenement, is subject to the easement shall be reduced accordingly

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

19. (5) Farm lands and buildings For the purposes of determining the current value of farm lands used only for farm purposes by the owner or used only for farm purposes by a tenant of the owner and buildings thereon used solely for farm purposes, including the residence of the owner or tenant and of the owner's or tenant's employees and their families on the farm lands,

(a) consideration shall be given to the current value of the lands and buildings for farm purposes only;

(b) consideration shall not be given to sales of lands and buildings to persons whose principal occupation is other than farming;

19.(5.1) Where the owner dies or retires Where the owner of farm lands entitled to the benefit of subsection (5) dies or retires, the current value of the lands and buildings in respect of which subsection (5) applies shall be determined in the manner provided in subsection (5) for the period the lands are held by the owner after his or her retirement or held by his or her estate after his or her death, but in no case beyond the two years immediately following the owner's death or retirement unless the lands are occupied by the surviving spouse of the deceased owner or by the retired owner.

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.

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 are the Current Values of the Subject Properties?

MPAC's Evidence

9MPAC's valuation reports described the six subject properties as being farm land, used for farm purposes. As a result, the properties used for comparison were also farm lands use for farm purposes. MPAC produced a separate valuation report for each property. The reports used the same seven comparable properties to arrive at a current value for each property under appeal.

10The seven comparable properties range in size, from 8.94 acres to 42 acres. Six of them are comprised of Class 1 farm land and the seventh is Class 2 farm land. The seven properties sold between May 2011 and May 2016 with prices ranging from $150,000 to $790,000.

11Because the comparable properties did not sell on the valuation day, MPAC applied a time adjustment factor ("TAF") to each of the seven sale values. The purpose of adjusting the sale values was to allow direct comparison between the comparable properties and the subject properties as though they all sold on the common valuation day. For the 2018 and 2019 taxation years, the valuation day is January 1, 2016.

12The time adjusted sale ("TAS") values of the seven comparable properties ranged from $189,744 to $854,879. When these value are divided by the acreage of each sale, the TAS values per acre ranges from $11,294 to $21,224, with a mean of $16,097 and a median of $14,727 per acre. There was no correlation between property size and value per acre in the comparable properties sample selected by MPAC.

13MPAC submitted that the median value per acre from the seven comparable sales in evidence is the best indication of value per acre of the six properties under appeal. It submits that median values eliminate inaccuracies because it ignores outlying values that could skew a mean or average calculation, particularly when considering a relatively small sample of seven properties. The Appellant did not refute MPAC's submissions.

14By determining this range of value per acre, MPAC then made reasonable adjustments to compare the range with the six properties under appeal. The result was MPAC's opinion of current value for each property, summarized as follows:

1. Property No. 1 - $804,000;
2. Property No. 2 - $286,000;
3. Property No. 3 - $491,000;
4. Property No. 4 - $363,000;
5. Property No. 5 - $609,000; and
6. Property No. 6 - $462,000.

15MPAC concluded that each of these current values is within the range established by the comparable sales and are therefore reasonable.

Appellant's Evidence

16Dennis Driedger (the "Appellant") submitted that by the definition of current value in the Act, the best evidence of the current value is a sale of the subject properties. The Appellant testified that each of the six properties under appeal had been sold prior to the valuation day of January 1, 2016.

17He also testified that MPAC published TAF for sale values going back to January 2008. By applying the applicable TAF for each sale of the subject properties, the Appellant arrived at a TAS price that he believed was a meaningful indication of the values of the six properties. His submissions are summarized as follows:

Property	Sale Price	Date	MPAC's TAF	Resulting Sale Value as of January 1, 2016
No. 1	$457,950	April 2010	1.5149*	$709,365
No. 2	$130,000	January 2012	1.171	$152,230
No. 3	$317,160+	May 2012	1.136	$360,293
No. 4	$222,840+	May 2012	1.136	$253,146
No. 5	$372,454^	January 2006	N/A	N/A
No. 6	$350,000	July, 2009	1.584	$554,400

*This TAF is misquoted in Mr. Driedger's testimony. The correct figure is 1.549. The resulting value figure reflects the corrected TAF. +properties No. 3 and No. 4 were sold together and have subsequently been severed. Sale values shown are pro-rated from the original sale price. ^Property No. 5 was sold as part of a larger parcel in 2006 and has subsequently been severed. The sale value shown is the pro-rated value of the current 44.89 acres of the original 96.42 acres sold.

18As MPAC's published TAFs do not go back as far as 2006, the Appellant was not able to apply this approach to Property No. 5. As an alternative, he submitted a recent sale of a different property adjacent to Property No. 5 for $11,000 per acre. By applying this value to the 44.89 acres at Property No. 5, Mr. Driedger submitted that a reasonable current value would be $493,790.

Board's Analysis

19The Board has frequently held that the best evidence of current value is a sale of the subject property on or near the valuation day. For the years under appeal, the valuation day is January 1, 2016. When there is no sale of the subject property available, the next best evidence of current value is the sale of properties that are reasonably comparable to the subject property, accounting for differences as necessary.

20The preference for a sale of the subject property is based on two assumptions. The first assumption is that the subject property did not change between the sale date and the valuation day. Secondly, where there is a difference in time between the sale date and the valuation day, this time difference can be adjusted to arrive at an evidence-based value.

21In this case, MPAC prefers the sales of comparable properties as the best evidence of the current value of the properties under appeal. MPAC submitted that the sale dates used by the Appellant for each of the six properties are too far away from the valuation day. The dates of these sales were from 2006 through 2012.

22The Appellant submitted that each of the six properties have a sale date attached. In each case he or his company was the purchaser. He had intimate knowledge of each sale. The Appellant took the sale values for each property and applied MPAC's published TAF to each. He submitted that using an actual sale and adjusting it by established time factors used by MPAC is the best approach to determining current value.

23Each approach has merit and the decision the Board must make is which one of the two approaches is the best for each property under appeal.

Property No. 1 - Is 65.37 acres comprised of 7 acres of Class 1 farm land, 57.37 acres of Class 2 farm land, one acre of Class 6 farm land and two farm buildings totaling 2,232 square feet.

24This property sold for $457,950 in April 2010. At the time of the sale, the property was in the same condition as it was on the valuation day. By using MPAC's TAF for the 2010 time period of 1.549, the result is $709,365.

25MPAC compared Property No. 1 with seven comparable properties that sold between May 2011 and May 2016. When the median per acre TAS value of these seven comparable sales of $14,727 is applied to the 65.37 acres of Property No. 1, the result from the direct comparison approach is $962,704. The Board finds that for Property No. 1, the best evidence of current value is that of the Appellant. The Appellant's approach used the sale of Property No. 1 and applied MPAC's published TAF. The Board finds the current value is $709,000, rounded.

Property No. 2 - Is 20.23 acres with 15.23 acres of Class 1 farm land and 5 acres of Class 2 farm land.

26This property sold in January 2012 for $130,000. Evidence at the hearing indicated that this sale took place between the Appellant and a non-farmer who inherited the property from a farmer. The inherited property included both farm land and a residential portion; the Appellant purchased only the farm land. In the Town of Leamington, in order to sever a residential portion from farmland, a farmer has to be on title for 12 months. For that reason, the Appellant, who is a farmer, was added to the title with a registered 1% share. Once the 12 months passed and the severance was allowed, the purchase between the vendor and the Appellant took place. The sale documents between the vendor and the Appellant were presented at the hearing. MPAC argues that this is not an arm's length sale and therefore should be disregarded as an indication of the property's current value.

27The Appellant testified that the sale represented the current value at the time and that when MPAC's TAF is applied for January 2012, the result is $152,230.

28MPAC compared this property with the same seven properties used in the comparison with Property No. 1. By applying the median value per acre drawn from the seven comparable sale properties of $14,727 to Property No. 2 20.23 acres, the result is $297,927.

29The Board received no evidence from the parties that the sale of this property did not comply with the provisions found in section 19(5) of the Act with regard to valid farm sales. However, the Board is not satisfied that it was an open market and arm's length sale. Evidence at the hearing indicated the original farm property included a farm house. The eventual sale to the Appellant occurred after the severance of the farm house. There was no clear evidence as to the apportionment of the value of the farm house and the land portion of the property. This raises questions about the subject sale's probative value in determining the value of the property under appeal.

30Accordingly, the Board finds that, on a balance of probabilities, MPAC's comparison to other sales in the area is the most reasonable. The current value of Property No. 2 is $298,000 (rounded).

Property No. 3 - Is 35.58 acres with 27.58 acres of Class 1 farm land and 8 acres of Class 2 farm land, and, Property No. 4 - is 25 acres with 21 acres of Class 1 farm land and 4 acres of Class 2 farm land.

31Property No. 3 is assessed at $491,000 for both 2018 and 2019 taxation years. Property No. 4 is assessed at $391,000 for the 2018 taxation year and $363,000 for the 2019 taxation year. MPAC is recommending the lower of the two values for both taxation years.

32These two properties sold in May 2012 for a total of $540,000. Since the sale, the property was severed to create the two properties. On a pro-rated basis, Property No. 3 carried $317,160 of the original purchase price. On the same basis, Property No. 4 carried a value of $222,840.

33The Appellant applied MPAC's TAF for May 2012 of 1.136 to each part of the sale price to arrive at current values of $360,294 and $253,146 respectively.

34MPAC submitted that the 2012 sale cannot be used effectively to arrive at a current value for the two separate parcels because the land subject to the sale changed dramatically to create the two separate parcels. Mr. Holmes submitted that it would be reasonable for the two properties to have sold for different prices in 2012 had they been separate parcels at that time.

35When the mean TAS value per acre derived from MPAC's valuation report of $14,727 is applied to Properties No. 3 and No. 4 the results are $523,987 and $368,175, respectively.

36The Board finds that the two properties would reasonably have sold for different prices had they been severed prior to their 2012 sale. Accordingly, the Board finds the best indicator of the current values of Properties No. 3 and No. 4 are $524,000 and $368,000 respectively (both rounded) using MPAC's median sale value per acre of $14,727.

Property No. 5 - Is 44.89 acres of Class 2 farm land.

37The sale of Property No. 5 took place in 2006, two years before any of MPAC's TAFs apply, and, as part of a larger property, for $800,000. The larger property comprised of 96.42 acres at the time of the sale. The Appellant submitted that an indication of value could be the pro-rated value of that sale per acre, applied to the 44.89 acres of Property No. 5. The result is $372,454.

38The Appellant advanced an alternative valuation method by applying the sale value of an adjacent property. Eleven months prior to the hearing, the Appellant purchased a property located east of this property for $11,000 per acre. When applied to Property No. 5, the Appellant submitted the result is $493,790 or $494,000, rounded.

39When MPAC's median TAS per acre value of $14,727 is applied to the 44.89 acres of Property No. 5, the result is $661,095

40The Appellant's case on Property No. 5 suffers from not having a reliably TAS value. In addition, his comparison to the purchase of a neighbouring property lacked detail of the purchase and its physical details. The Board therefore prefers the comparable property evidence of MPAC. The current value of Property No. 5 is $661,000 (rounded).

Property No. 6 - Is 49 acres of Class 1 farm land.

41Property No. 6 sold in July 2009 for $350,000. This sale price included the present 49 acres along with a one acre lot and residential dwelling. At the time of the sale, these two properties had a single roll number. Property No. 6 was subsequently severed to create the current 49 acre parcel. At the time of the sale, by agreement, the $350,000 sale price was apportioned equally between the residence and the farm, resulting in a sale value for the farm land portion of $175,000 according to the Appellant. By applying MPAC's TAF for July 2009, the Appellant submitted that the current value of the 49 acres is $277,200.

42When the median TAS per acre value derived from MPAC's valuation study, of $14,727 is applied to Property No. 6's 49 acres, the result is $721,623.

43The Board finds that the best evidence is that of MPAC. The Appellant's submission lacked detail of the apportionment of value of the 2009 sale between residential land and farm land. From the evidence at hearing, the division in the sale agreement was arbitrary. Accordingly, the Board finds that the current value of Property No. 6 is $721,000 rounded.

44In summary, the Board finds the current values of the six properties are as follows (all rounded):

Property No.	Roll Number	Current Value

1. | 3706-670-000-00200-0000 | $709,000
2. | 3706-670-000-00400-0000 | $298,000
3. | 3706-700-000-00700-0000 | $524,000
4. | 3706-700-000-00710-0000 | $368,000
5. | 3706-700-000-01900-0000 | $661,000
6. | 3706-740-000-01900-0000 | $721,000

Should the Current Values Determined be reduced for the Purpose of Equitable Assessment, when the Assessments of Similar Properties in the Vicinity are considered?

Appellant's Case

45The Appellant submitted that the best means of determining whether or not the assessments of the subject properties are fair and equitable, is to compare the values determined for each with the assessments of adjacent or nearby properties.

46The Appellant testified that he searched the 'About My Property' portion of MPAC's website to see what the assessments of his neighbours were for each of the six properties under appeal. He arrived at the following conclusions:

Property under Appeal	Returned Value Per Acre	Average Assessed value of surrounding properties (number of properties)	Value Indicated by Average assessment of Nearby Properties
No. 1 – 64.37 acres plus one acre Class 6 assessed at $2,275 and buildings assessed at $10,278	$12,299	$8,582 (3)	$564,976
No. 2 – 20.23 acres	$14,137	$8,582 (3)	$173,614
No. 3 – 35.58 acres	$13,800	$7,550 (4)	$268,629
No. 4 – 25 acres	$14,520	$7,550 (4)	$188,750
No. 5 – 44.89 acres	$13,566	$8,665 (3)	$388,972
No. 6 – 49 acres	$ 9,429	$6,750 (2)	$330,750

47By this accounting, the Appellant submitted that the six properties should have their assessments reduced, as follows, for the purposes of equity or fairness (all rounded):

• No. 1 – from $804,000 to $565,000;
• No. 2 – from $286,000 to $174,000;
• No. 3 – from $491,000 to $269,000;
• No. 4 – from $391,000 (2018) and $363,000 (2019) to $189,000;
• No. 5 – from $609,000 to $389,000; and
• No. 6 – from $462,000 to $331,000.

48MPAC took exception to this approach. While Mr. Holmes acknowledged that assessments of nearby properties can be indicative of the value of properties adjacent, he stated the sample of similar properties is too small in the Appellant's calculations.

MPAC's Case

49MPAC disclosed an Equity Analysis report for each of the six properties under appeal. Mr. Holmes testified that the 30 properties cited in the Equity Analysis report for each of the subject properties were identical and that the findings of one could be applied to all of the subject properties.

50The Equity Analysis report compared the assessments of 30 properties to their sale prices. These 30 properties, according to MPAC, are all in the vicinity of the subject properties and were sales of farm land used for farm purposes. According to MPAC the study indicates that similar farm properties in the vicinity of the subject properties are assessed at approximately 99% to 100% of their TAS value (or, current value); indicating that no downward adjustment to the current values of the subject properties is necessary for them to reflect an equitable assessment.

51Mr. Holmes testified that MPAC prefers to use at least 30 properties to prepare an equity analysis. In order to do so, he had to expand the area of search to other municipalities. The result of this search uncovered 15 properties inside the limits of the Town of Leamington, and 15 outside of the Town of Leamington.

52When the 15 properties outside of the Town of Leamington were removed from the Equity Analysis Report, the mean Assessment to Sale Ratio (ASR) of the remaining properties was 99.2%; very close to the result determined by MPAC.

53In order for the Board to make a finding of an adjustment to assessment, based on equity or fairness, the assessments of similar properties in the vicinity of a subject property must be considered. The Appellant selected the assessments of other properties that were either adjacent to the subject properties under appeal, or in very close proximity. In every case those properties were of similar or identical characteristics as the subject properties under appeal.

54The Board heard evidence from the Appellant that, generally speaking, property values in this part of the Town of Leamington are assessed at a lower level to the east and higher to the west. The assessments of similar properties cited by the Appellant bore this condition out, with similar properties adjacent to the more easterly properties under appeal being lower than the properties further west.

55This condition of changing assessments based on localized conditions is not considered in MPAC's Equity Analysis Report. Therefore, the Board prefers the evidence of the Appellant, as his sample most closely met the requirements of the Act with regard to similarity and vicinity. The Board, however makes the following adjustments to the Appellant's findings:

• Property No. 3 – The Board corrects the Appellant's average assessment calculation from $7,550 per acre to $8,293 per acre for a revised value adjusted for equity of $295,065 ($295,000, rounded);
• Property No. 4 – The Board corrects the Appellant's average assessment calculation from $7,550 per acre to $8,293 per acre for a revised value adjusted for equity of $207,325 ($207,000, rounded); and
• Property No. 6 – The Board adjusts the Appellant's average assessment calculation from $6,750 to $7,109 as the Board prefers the closest four adjacent properties as opposed to three properties used by the Appellant, with a revised value adjusted for equity of $343,931 ($344,000 rounded).

DECISION

56The Board finds the current values of the subject properties are as follows:

Property No.	Roll Number	Current Value

1. | 3706-670-000-00200-0000 | $709,000
2. | 3706-670-000-00400-0000 | $298,000
3. | 3706-700-000-00700-0000 | $524,000
4. | 3706-700-000-00710-0000 | $368,000
5. | 3706-700-000-01900-0000 | $661,000
6. | 3706-740-000-01900-0000 | $721,000

57The Board also finds that there is evidence to indicate a reduction in this value is necessary for the purposes of equitable assessment.

58Therefore, the Board finds that the assessments of the subject properties are reduced as follows:

Property No.	Roll Number	From	To

1. | 3706-670-000-00200-0000 | $804,000 | $565,000
2. | 3706-670-000-00400-0000 | $286,000 | $174,000
3. | 3706-700-000-00700-0000 | $491,000 | $295,000
4. | 3706-700-000-00710-0000 | $391,000 (2018) and $363,000 (2019) | $207,000
5. | 3706-700-000-01900-0000 | $609,000 | $389,000
6. | 3706-740-000-01900-0000 | $462,000 | $344,000,

all in the Farm property class for the 2018 and 2019 taxation years.