Laurentian Heights Limited v. Municipal Property Assessment Corporation, 2019 CanLII 47972

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: May 24, 2019

FILE NO.: WR 160192

Assessed Person(s): Laurentian Heights Limited; Debra Lynn Patrois; Ronald Edward Fennell

Appellant(s): Laurentian Heights Limited

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

Respondent(s): City of North Bay

Property Location(s): Surrey Drive

Municipality(ies): City of North Bay

Roll Number(s): 4844-050-077-47800-0000

Appeal Number(s): 3259775, 3314142 and 3367513

Taxation Year(s): 2017, 2018 and 2019

Hearing Event No. 712767

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

Heard: April 24, 2019 in North Bay, Ontario

APPEARANCES:

Parties	Representative
Laurentian Heights Limited; Debra Lynn Patrois; Ronald Edward Fennell	John Wallace
MPAC	Louise St. Jean
City of North Bay	No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1Laurentian Heights Limited (“LHL”) and new owners Debra Lynn Patrois and Ronald Edward Fennell (the “Appellants”) are the owners of Surrey Drive (the “Subject Property”), which is located in the City of North Bay (the “City”).

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 current value of the Subject Property at $85,000 for the 2017 and 2018 taxation years; and at $80,000 for the 2019 taxation year.

4The Appellants have filed appeals for the 2017, 2018, and 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 $70,000. At this hearing, MPAC takes the position that its assessed values should be reduced to $80,000 for the 2017 and 2018 taxation years; and confirmed at $80,000 for the 2019 taxation year.

5Pursuant to s. 40(11) of the Act, the City, is a party to this proceeding. However, no one appeared on behalf of the City.

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 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, equity is not at issue at this hearing.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds the current value assessment for the 2017, 2018 and 2019 taxation years is $70,000. Therefore, the Board reduces the returned assessment from $85,000 to $70,000 for the 2017 and 2018 taxation years; and from $80,000 to $70,000 for the 2019 taxation year. Pursuant to s. 44.(3)(b) of the Act, an equitable reduction of this value is not required.

RELEVANT LEGISLATION

8Section 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.

9Section 19.(1) of the Act states:

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

10Section 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:

4. For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

11Section 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.

12Section 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.

ISSUES

13The issue to be determined on this appeal is the correct current value of the Subject Property for the 2017, 2018 and 2019 taxation years.

Description of the Subject Property

14The Subject Property is vacant residential land not on water (property type 100), located at Surrey Drive, in the Corporation of the City of North Bay. The Subject Property has a frontage of 80 feet, a depth of 150.5 feet and a total lot size of 0.28 acre.

DISCUSSION, ANALYSIS AND FINDINGS

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

MPAC’s Evidence

Louise St. Jean, Valuation Specialist for MPAC presents a Valuation Report, dated August 22, 2018 (“Valuation Report”) which she prepared and testifies to the information contained in the report.

15Ms. St. Jean states that she visited the Subject Property on January 3, 2018, and confirmed that the measurements, data and classification are correct. She states that she also reviewed the sales and property data of the suggested comparable used in her analysis on January 3, 2018.

16In support of current value, Ms. St. Jean states that she relies on the Direct Comparison Approach to value and presents an analysis of the sales of seven suggested comparable properties which occurred over the period 2013 to 2018. These seven suggested comparable properties are located in the same homogeneous neighbourhood, and within 0.25 kilometres of the Subject Property. Ms. St. Jean states that she relies on the actual sale prices, because it was very difficult to determine an accurate time adjustment factor due to the limited number of sales of vacant lot.

17Ms. St. Jean states that she selected sold properties that are inferior, superior and similar to the Subject Property to allow her to establish a probable range of current value for the Subject Property, by bracketing the Subject Property between sold properties that are inferior and superior to it.

18These seven suggested comparable properties are located at 440 Surrey Drive, sold in 2013 for $82,500; 21 Kenreta Drive, sold in 2016 for $95,000; 436 Surrey Drive, sold in 2014 for $75,000; 438 Surrey Drive, sold in 2016 for $80,000; Surrey Drive (Roll ending 46400), sold in 2013 for $70,000; 19 Kenreta Drive, sold in 2016 for $82,500; and Surrey Drive (Roll ending 47800), sold in 2018 for $70,000.

19In reviewing these seven sales, Ms. St. Jean testifies that she relies only on three of the seven sales which occurred in 2016 at 21 Kenreta Drive with 0.29 acres, sold in 2016 for $95,000; 438 Surrey Drive with 0.28 acres, sold in 2016 for $80,000; and 19 Kenreta Drive with 0.22 acres, sold in 2016 for $82,500 and with a sales range from $80,000 to $95,000. Based on these three sales Ms. St. Jean is of the view that the best evidence is the sale of 438 Surrey Drive for $80,000 (lower end of the range). She testifies that this suggested comparable is located on the same street very close to the Subject Property with similar lot size, road access and municipal services.

20Based on this analysis, Ms. St. Jean estimates the current value to be $80,000.

21In response to questions on cross-examination, Ms. St. Jean states that she did not consider the sale at Surrey Drive (Roll ending 47800, the Subject Property), sold in 2018 for $70,000 in her analysis, because this sale date is too far removed from the valuation date of January 1, 2016.

22Ms. St. Jean also testifies that costs attributed to a developer like LHL for such things like (sewer, paving, hydro, engineering fees, preparation, blasting bedrocks) are not taken into consideration when assessing vacant lots. She states that MPAC only assesses raw lands (e.g. frontage, depth and total site area).

MPAC’s Submission

23Relying on its evidence, MPAC submits that the current value should be $80,000.

24MPAC argues that no adjustments are given to the issue of bedrocks, because MPAC only evaluates the raw data (frontage, depth and total site area) of vacant lots. MPAC argues that such costs are the responsibilities of developers like LHL, which the Appellants concur to on cross-examination.

Appellants’ Evidence

25The Appellants submit that the returned assessment of $85,000 is too high and that the correct value should be $70,000 based on the sale of the Subject Property in 2018. The Appellants representative John Wallace also testifies that the Subject Property is negatively impacted by bedrock, and when the returned assessment is reduced for the removal of bedrocks the suggested value of $70,000 is shown to be correct for the Subject Property.

26In support of the Appellants argument, Mr. Wallace presents an evidence package which he prepared and date June 27, 2018 and testifies to the information contained therein.

27Included in the package is a copy of a portion of the Approved Draft Plan of Subdivision showing the three phases of development along Surrey Drive; a portion of Plan 36R-12526 identifying the Subject Property; and a spreadsheet showing sixteen sales which occurred over the period 2007 to 2018, on the north side lots for both Surrey Drive and Kenreta Drive, with their corresponding lot dimensions for all three phases.

28The spreadsheet shows that eleven sales occurred over the period 2007 to 2013, with sale price ranging from $62,500 to $82,500; one sale in 2015 for $95,000; three sales in 2016, with sale price ranging from $80,000 to $95,000; and one sale in 2018 for $70,000. Based on these sales, the Appellants are of the opinion that the best comparable properties are the sales which occurred at 438 Surrey Drive, sold in 2016 for $80,000 and the sale at 19 Kenreta Drive, sold in 2016 for $82,500.

29In regard to the negative impact of the bedrock, the Appellants believe that the Subject Property was seen as less attractive to potential buyers because of the steepness of bedrocks. Mr. Wallace states that Lot 6 (438 Surrey Drive), Lot 7 (440 Surrey Drive) and Lot 8 (Surrey Drive, Roll ending 47600) had similar bedrocks and were blasted out at a cost in the range of $10,000 to $15,000. Based on this range, the Appellants believe it would cost approximately $20,000 to have the bedrocks blasted on the Subject Property.

30The Appellants also state that two of the above three properties (438 Surrey Drive and 440 Surrey Drive) were sold, however, Lot 8 (Surrey Drive, Roll ending 47600) remains unsold. Based on the fact that Lot 8, which is located adjacent to the Subject Property, is not sold, the Appellants believe that the negative impact of the bedrock on the Subject Property is even greater and less attractive to potential buyers. Mr. Wallace also states that it was not economical to have the bedrock on the Subject Property blasted, because Lot 8 which was blasted remains unsold. Therefore, the Subject Property was listed “as is” on the market and sold in 2018 for $70,000.

31On cross-examination, Mr. Wallace agrees that costs for such things as (sewer, paving, hydro, engineering fees, preparation, blasting bedrocks) are the responsibilities of Developers like LHL.

Appellant’s Submission

32Mr. Wallace argues that the correct current value for the Subject Property is $70,000 based on the above evidence.

33Mr. Wallace argues that a negative adjustment of approximately $20,000 is appropriate for the removal of bedrocks on the Subject Property.

Findings on Current Value

34Under 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.

35In reviewing MPAC’s seven sales in support of current value, the Board did not rely on the sales at 440 Surrey Drive, sold in 2013 for $82,500; 436 Surrey Drive, sold in 2014 for $75,000; and Surrey Drive (Roll ending 46400), sold in 2013 for $70,000, because the sale dates are too far removed from the valuation date of January 1, 2016, to provide any meaningful test of current value. However, the sale of the Subject Property in 2018 for $70,000 will be evaluated to see if the market value around the valuation date of January 1, 2016 support this value

36The remaining three sales which sold in 2016 at 21 Kenreta Drive, sold in 2016 for $95,000; 438 Surrey Drive, sold in 2016 for $80,000; and 19 Kenreta Drive, sold in 2016 for $82,500 demonstrate an average sale price of $86,000. Based on this analysis the Board finds that the Subject Property would likely have sold at the average sale price of $86,000, with similar frontage, depth and site area.

37In reviewing the issue of bedrock, the Board finds that the cost to cure value of $15,000 is appropriate. When this value is applied to the market value of $86,000 it results in a value of $71,000 ($86,000 - $15,000).

38In regard to the Appellant’s assertions that sale prices in the open market is declining, the Board finds that there appears to be a declining market with the sale of the Subject Property for $70,000 in 2018. However, the Board finds that there are not enough sales to make a definite conclusion that the market is declining. Therefore, the Board puts no weight on this issue.

39In regard to the sales presented in support of current value by the Appellant, the Board did not rely on the eleven sales which occurred over the period 2007 to 2013, with sale price ranging from $62,500 to $82,500, because the sale dates are too far removed from the valuation date of January 1, 2016, to provide any meaningful test of current value. However, the sale of the Subject Property in 2018 for $70,000 will be evaluated to see if the market value around the valuation date of January 1, 2016 support this value

40The remaining four sales at Surrey Drive, Phase 3 (Roll ending 48700) sold in 2015 for $95,000; 438 Surrey Drive, sold in 2016 for $80,000; 19 Kenreta Drive, sold in 2016 for $82,500; and 21 Kenreta Drive, sold in 2016 for $95,000 demonstrate an average sale price of $88,000. When this value is adjusted by the cost to cure value of $15,000 for the blasting it results in a value of $73,000 ($88,000 - $15,000).

41In evaluating the sale of the Subject Property for $70,000 in 2018, the Board finds that the market value of $73,000 is very close. Therefore, the Board finds the sale of the Subject Property for $70,000 to be the best evidence.

42Based on all of the above evidence, the Board finds the current value of the Subject Property to be $70,000.

DECISION

43The Board finds the current value of the Subject Property is $70,000 for the 2017, 2018 and 2019 taxation years. Therefore, the Board reduces the returned assessment from $85,000 to $70,000 for the 2017 and 2018 taxation years; and from $80,000 to $70,000 for the 2019 taxation year.