Laurentian Heights Limited v. Municipal Property Assessment Corporation, Region 28, 2019 CanLII 52943

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

June 03, 2019

FILE NO.:

WR 160196

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):

Kenreta Drive

Municipality(ies):

City of North Bay

Roll Number(s):

4844-050-078-32487-0000

Appeal Number(s):

3259781, 3314150 and 3367651

Taxation Year(s):

2017, 2018 and 2019

Hearing Event No.

712772

Legislative Authority:

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

Heard:

April 26, 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”) represented by John Wallace (“Apellant”) is the owner of Kenreta 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 $115,000 for the 2017 taxation year; at $99,000 for the 2018 taxation year; and at $95,000 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 $50,000. At this hearing, MPAC takes the position that its assessed values should be reduced to $95,000 for the 2017 and 2018 taxation years; and confirmed at $95,000 for the 2019 taxation year.

5Pursuant to s. 40.(11) of the Act, 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 $73,000. Therefore, the Board reduces the returned assessment from $115,000 to $73,000 for the 2017 taxation year; from $99,000 to $73,000 for the 2018 taxation year; and from $95,000 to $73,000 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 Kenreta Drive, in the City of North Bay. The Subject Property has an effective frontage of 236.22 feet, an effective depth of 124.31 feet and an effective total lot size of 0.67 acre.

DISCUSSION, ANALYSIS AND FINDINGS

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

MPAC’s Evidence

15Louise 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.

17In 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 0.40 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.

18Ms. 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.

19These 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; Surrey Drive (Roll ending 48700), sold in 2015 for $95,000; 438 Surrey Drive, sold in 2016 for $80,000; Surrey Drive (Roll ending 46400), sold in 2013 for $70,000; and 19 Kenreta Drive, sold in 2016 for $82,500.

20In reviewing these seven sales, Ms. St. Jean testifies that the best evidence is the sale of suggested comparable property at Surrey Drive (Roll ending 48700), sold in 2015 for $95,000, with similar lot size to the Subject Property. Based on this sale Ms. St. Jean estimates the current value to be $95,000.

21On cross-examination Ms. St. Jean testifies that costs attributed to a developer like LHL for such things like sewer, paving, hydro, engineering fees, preparation, and 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).

22In response to the issues that the Subject Property is an unbuildable lot, Ms. St. Jean testifies that the Subject Property is not an unbuildable lot. Ms. St. Jean testifies that unbuildable lots are designated so by the Municipality. Ms. St. Jean explains that the designation prohibits any structural development, because there are no municipal services provided in the area. She testifies that no evidence has been presented to show that the Subject Property is designated unbuildable.

23In response to the sale of Lot 81, Surrey Drive, Plan M-312 for $36,000, Ms. St. Jean states that she did not consider the sale, 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. Ms. St. Jean argues that this fact is supported by the Agreement of Purchase and Sale, Schedule A which clearly states that “The Buyer agrees to pay the balance of the purchase price, subject to adjustments, to the Seller on completion of this transaction, with funds drawn on a lawyer’s trust account in the form of a bank draft, certified cheque or wire transfer using the Large Transfer System.” Schedule A also states that “The Buyer acknowledges and will assume all the expenses of By-Law 2013-160, pertaining to City Sewer and Water connection charges for the Subject Property.”

MPAC’s Submission

24Relying on its evidence, MPAC submits that the current value should be $95,000.

25MPAC argues that the Subject Property is not designated unbuildable. Therefore, no adjustment is required.

26MPAC argues that no adjustments should be given for the issue of bedrock, steepness and set-backs, 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 Appellant concurs to on cross-examination.

27MPAC argues that the sale of Lot 81, Surrey Drive for $36,000 in 2016 is not an “unencumbered” sale, because the buyers assumed other financial responsibilities as a condition of the sale as stated in the Agreement of Purchase and Sale, Schedule A.

Appellant’s Evidence

28The Appellant presents his evidence package which he prepared and date June 27, 2018 and testifies to the information contained therein.

29Included 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.

30The 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 Appellant is of the opinion that the best comparable properties are the sales which occurred at Kenreta Drive, Phase 1 (Lot 6), sold in 2011 for $70,000 and Surrey Drive, Lot 9 (Roll ending 47800), sold in 2018 for $70,000.

31The Appellant testifies that during the planning stage of the development of Kenreta Drive, Phase 2, the Subject Property was deliberately skipped and was not connected to the municipal sewer and water services, because the Subject Property was not developable as residential lots. The Appellant also testifies that consideration was given to the fact that the abutting serviced lot (Lot 5) on the west side had no offers over the past 10+ years from potential buyers and therefore, supports the decision of not installing municipal services to the Subject Property.

32The Appellant testifies that the Subject Property has solid bedrock rising steeply from Kenreta Drive and that the lot is obviously undevelopable. The Appellant believes that the bedrocks and steepness negatively impact the value of the Subject Property. The Appellant presents evidence that blasting the bedrocks on other lots costs in the range of $10,000 to $15,000.

33In support of current value, the Appellant presents the sale of Lot 81, Surrey Drive, sold on December 16, 2016 as an unserviceable lot for $36,000. The Appellant submits this suggested comparable property with a frontage of 150 feet, with easy access to the road, and developable should form the basis for establishing the value for the Subject Property. Based on this sale, the Appellant is of the view that the Subject Property should be in the range of $30,000. The Appellant also states that he is willing to accept an offer of $50,000, should one be made.

Appellant’s Submission

34The Appellant submits that the correct current value for the Subject Property is $50,000 based on the above evidence.

35The Appellant submits that MPAC’s suggested comparable at Surrey Drive (Roll ending 48700), sold in 2015 for $95,000 is not comparable to the Subject Property because it has much easier road access and quite developable.

Findings on Current Value

36Under 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.

37In reviewing MPAC’s seven sales in support of current value, the Board did not rely on the three 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. The Board finds that the sale dates are too far removed from the valuation date of January 1, 2016, to provide any meaningful test of current value. Therefore, the Board relies on the remaining four sales which occurred in 2015 and 2016 in the same neighbourhood as the Subject Property.

38The remaining four sales at 21 Kenreta Drive, sold in 2016 for $95,000; Surrey Drive (Roll ending 48700), sold in 2015 for $95,000; 438 Surrey Drive, sold in 2016 for $80,000; and 19 Kenreta Drive, sold in 2016 for $82,500 demonstrates an average sale price of $88,000 (rounded). These four comparable properties are located in the same homogeneous area close to the Subject Property, with an average frontage of 94 feet and a total lot size of 0.36 acre. This is compared to the Subject Property with a frontage of 236.22 feet and a total lot size of 0.67 acre.

39In regard to the issue of solid bedrock, set-backs and steepness, the Board agrees that an adjustment for blasting the bedrocks is appropriate. When the cost to cure value of $15,000 for blasting is applied to the market value it results in a value of $73,000 ($88,000 - $15,000).

40In reviewing the Appellant’s evidence in regard to the issue that the Subject Property is not developable as a residential lot, the Board accepts MPAC’s explanation that lots that are unbuildable are designated so by the Municipality and are prohibited from any structural development, because there is no municipal services available in the area. The Board did not accept the opinion of the Appellant that the lot is undevelopable, and finds that the Appellant presents no official documents to show that the Subject Property is designated unbuildable.

41In regard to the only sale relied on by the Appellant at Lot 81, Surrey Drive, sold in 2016 for $36,000, the Board did not rely on this sale, because this suggested comparable property is not similar to the Subject Property. This suggested comparable property was sold as an unserviceable lot (municipal services are not available in the area), whereas, the Subject Property is a serviceable lot, because municipal services are available for connection. The Board finds that the Appellant made the decision not to connect to these services.

42Based on all of the above evidence, the Board finds the current value for the Subject Property is $73,000.

DECISION

43The Board finds the current value of the Subject Property is $73,000 for the 2017, 2018 and 2019 taxation years. Therefore, the Board reduces the returned assessment from $115,000 to $73,000 for the 2017 taxation year; from $99,000 to $73,000 for the 2018 taxation year; and from $95,000 to $73,000 for the 2019 taxation year.