Laurentian Heights Limited v. Municipal Property Assessment Corporation, 2019 CanLII 47987

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

May 24, 2019

FILE NO.:

WR 160193

Assessed Person(s):

Laurentian Heights Limited

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):

4844-050-077-48800-0000

Appeal Number(s):

3259778, 3314219 and 3367597

Taxation Year(s):

2017, 2018 and 2019

Hearing Event No.:

712769

Legislative Authority:

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

Heard:

April 25, 2019 in North Bay, Ontario

APPEARANCES:

Parties

Representative

Laurentian Heights Limited

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”) is the owner of Surrey Drive (the “Subject Property”), which is located in the City of North Bay.

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 $89,000 for the 2017 taxation year; $60,000 for the 2018 taxation year; and at $46,500 for the 2019 taxation year.

4The Appellant has 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 the Appellant’s position that MPAC’s assessment of current value is too high and that the correct current value should be $35,000. At this hearing, MPAC takes the position that its assessed values should be reduced to $46,000 for the 2017, 2018 and 2019 taxation years.

5Pursuant to s. 40.(11) of the Act, the City of North Bay (the “City”), is a party to this proceeding. However, no on 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 Appellant asserts 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 $36,000. Therefore, the Board reduces the returned assessment from $89,000 to $36,000 for the 2017 taxation year; from $60,000 to $36,000 for the 2018 taxation year; and from $46,500 to $36,000 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 City of North Bay. The Subject Property has an effective frontage of 135.59 feet, a depth of 205.1 feet and a total lot size of 0.64 acre.

DISCUSSION, ANALYSIS AND FINDINGS

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

MPAC’s Evidence

15Ms. 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.

16Ms. 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.

17Ms. St. Jean testifies that the Subject Property currently has no municipal services (water, hydro and sewer), because the sewer line which runs on Surrey Drive towards the hydro corridor ends prior to reaching the Subject Property. She testifies that the sewer line ends at that point, because the Subject Property slopes away from the sewer flow. Ms. St. Jean states that it would be fairly easy for the Subject Property to gain access to these services when the sewer line is extended down Kenreta Drive to the hydro corridor.

18In 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 four suggested comparable properties which occurred in 2015 and 2016. Ms. St. Jean testifies that she first searched for sales of suggested comparable properties like the Subject Property without municipal services and was unsuccessful.

19These four suggested comparable properties are located in the same homogeneous neighbourhood, and within 0.53 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.

20Ms. 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.

21These four suggested comparable properties are located at 21 Kenreta Drive, sold in 2016 for $95,000; 438 Surrey Drive, sold in 2016 for $80,000; Surrey Drive (Roll ending 48700), sold in 2015 for $95,000; and 19 Kenreta Drive, sold in 2016 for $82,500.

22In reviewing these four sales, Ms. St. Jean testifies that these four suggested comparable properties are relatively similar in size. However, they are superior to the Subject Property, because they have municipal services and reflect a median sale price of $88,750.

23Ms. St. Jean testifies that historically MPAC applies a 33% reduction to properties identified as “unbuildable” by the Municipality. However, MPAC conducted a more recent analysis of the sales of unbuildable properties and determined that the reduction should be increased to 50% reduction. Based on this finding and the fact that the Subject Property is not identified as unbuildable, Ms. St. Jean is of the view that the Subject Property should be slightly higher in value for difference in size. Therefore, she applied a 48% reduction to the median sale price $88,750 determined above, to arrive at a value of $46,000 ($88,750 - $42,600) rounded.

24In response to questions on cross-examination, Ms. St. Jean states that she did not consider the sale of Lot 81, Surrey Drive, Plan M-312 for $36,000, because the sale price is not “unencumbered.” She argues that according to the real estate agent, the buyer agreed to the sale price of $36,000 and assumed other financial responsibilities as a condition of the sale for connection to the City Sewer and Water.

25Ms. 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

26Relying on its evidence, MPAC submits that the current value should be $46,000.

27MPAC submits that the Subject Property has been recognized as an unserviceable lot and receives a 48% reduction of the value determined in the open market.

28MPAC argues that the sale of Lot 81, Surrey Drive is not an unencumbered sale, because the buyers assumed other financial responsibilities for connection to City sewer and water as a condition of the sale as stated in the Agreement of Purchase and Sale, Schedule A.

Appellant’s Evidence

29John Wallace (“Appellant”) testifies that on November 17, 2014 a Request for Reconsideration (“RfR”) for the Subject Property was filed with MPAC because of the lack of municipal services. In response, MPAC issued Minutes of Settlement (“MoS”) and reduced the returned assessment from $73,000 to $46,500, which was approved by LHL on September 30, 2015.

30The Appellant submits that the returned assessments of $89,000 for the 2017 taxation year; $60,000 for the 2018 taxation year; and $46,500 for the 2019 taxation are too high and that the correct value should be $35,000 based on the sale of Lot 81, Surrey Drive (Roll ending 47800) for $36,000 in 2016 and with a slight adjustment for similarity to the Subject Property.

31In support of his argument, the Appellant presents his evidence package which he prepared and date June 27, 2018 and testifies to the information contained therein.

32Included 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; a spreadsheet showing 16 sales which occurred over the period 2007 to 2018; a copy of an engineering plan; a copy of an Agreement of Purchase and Sale for Lot 81, Surrey Drive; and a list of connectivity cost for municipal services.

33In support of his argument, the Appellant presents the sale of Lot 81, Surrey Drive which was sold on December 16, 2016 as an unserviced lot for $36,000. He states that this lot was on the market for several years with no interest until it was purchased by the abutting homeowners. The Appellant states that the Subject Property was listed for $94,900. The Appellant is of the view that this sale should form the basis for establishing the value for the Subject Property.

34The Appellant testifies that the Subject Property road access is very steep (3%) and would worsen (10%) when the final roadway design elevation is completed. This, he argues, would have significant adverse impact on the slope of the driveway to access the Subject Property and more directly on the assessed value.

35In support of the above sale, the Appellant presents a copy of the Agreement of Purchase and Sale for Lot 81, showing the amount paid and reference to the City By-Law. He also presents a spreadsheet showing the cost to connect the sewer and water in accordance with the City By-Law 2013-160. The Appellant states that as of May 31, 2018, the cost to connect the sewer and water is $57,000, which he believes support the value of $35,000.

36On cross-examination, the Appellant argues that the sale of Lot 81, Surrey Drive, is an unencumbered sale for $36,000 in the open market.

Appellant’s Submission

37The Appellant submits that the correct current value for the Subject Property is $35,000 based on the above evidence.

38The Appellant submits that the sale of Lot 81, Surrey Drive in 2016, is the best comparable property, because it is an unencumbered sale of an unserviceable lot in the open-market.

39The Appellant submits that the steepness of the Subject Property would negatively impact its access and believes that an adjustment is warranted.

Findings on Current Value

40Under 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.

41In regard to the issue of “unbuildable” and “unserviceable”, the Board accepts MPAC’s explanation of unbuildable and unserviceable lots. MPAC explains that lots that are unbuildable are designated so, by the Municipality. That the designation prohibits any structural development, because there is no municipal services or for any other reasons determined necessary by the Municipality. On the other hand, MPAC states that unserviceable lot, as is the case of the Subject Property, means that the municipal services line has stopped before reaching the Subject Property and no connection is possible at this time. As the area develops and the municipal services line continues beyond the Subject Property, connection to these services would be made available. Based on this explanation and in the absence of no other evidence, the Board finds that the Subject Property is an unserviceable lot.

42The Board did not rely on MPAC’s negative adjustment of 49% for unserviceable lot. Instead, the Board relies on the sales presented into evidence for determining the correct current value.

43In reviewing MPAC’s four sales of suggested comparable properties located at 21 Kenreta Drive, with 0.29 acre and sold in 2016 for $95,000; 438 Surrey Drive, with 0.65 acre and sold in 2016 for $80,000; Surrey Drive (Roll ending 48700), with 0.28 acre and sold in 2015 for $95,000; and 19 Kenreta Drive, with 0.22 acre and sold in 2016 for $82,500. The Board finds the median sale price to be $88,750 which the Board will consider in its determination of current value.

44In reviewing the Appellant’s evidence regarding the steepness of the Subject Property, the Board finds that Appellant presents no factual evidence to quantify the impact. The Board also finds that until the Subject Property is developed, the true impact of its steepness would not be realized.

45In regard to the sale presented by the Appellant at Lot 81, Surrey Drive, sold in 2016 for $36,000, the Board finds this sale to be the best evidence of current value, because it is an unencumbered sale which occurred in the open market in 2016 for an unserviceable lot. The Board finds that the Agreement of Purchase and Sale, Schedule A, clearly supports this value, because the document states that the buyer only pays $36,000 to the seller. No factual evidence was provided in evidence to how that an encumbrance is registered on title for this property.

46Based on all of the above evidence, the Board finds the current value of the Subject Property to be $36,000.

DECISION

47The Board finds the current value of the Subject Property is $36,000 for the 2017, 2018 and 2019 taxation years. Therefore, the Board reduces the returned assessment from $89,000 to $36,000 for the 2017 taxation year; from $60,000 to $36,000 for the 2018 taxation year; and from $46,500 to $36,000 for the 2019 taxation year.