Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 21, 2019

FILE NO.: WR 160496

Assessed Person(s)/Appellant(s): Ewa Cebula-Dubreil

Appellant(s): Richard Dubreuil; Cebula-Dubreil Ewa

Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 31

Respondent(s): City of Sault Ste Marie

Property Location(s): 109 Town Line Road

Municipality(ies): City of Sault Ste Marie

Roll Number(s): 5761-060-070-15602-0000

Appeal Number(s): 3322216, 3322215, 3286771, 3314736 and 3368036

Taxation Year(s): 2016, 2017, 2018 and 2019

Hearing Event No. 713581

Legislative Authority: Section 40, Section 34 and 32 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

Heard: May 14, 2019 in Sault Ste Marie, Ontario

APPEARANCES:

Parties

Representative

Ewa Cebula-Dubreuil;

Self-represented

Richard Dubreuilcebula-Dubreil Ewa

MPAC

Pierre LeFebvre

City of Sault Ste Marie

No one appeared

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1Ewa Cebula-Dubreil (the “Appellant”) is the owner of 109 Town Line Road (the “Subject Property”), which is in the City of Sault Ste Marie.

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 2013 to 2016 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2012; and 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:

• $56,000 from January 1, 2016 to June 30, 2016;

• $511,000 from July 1, 2016 to December 31, 2016, pursuant to a supplementary assessment of $455,000 effective July 1, 2016 and a corrected assessment of $511,000 replacing the combined assessments effective September 1, 2016;

• $498,000 for the 2017 taxation year, pursuant to a corrected assessment;

• $412,000 for the 2018 taxation year with an apportionment breakdown of Managed Forest Tax Class $35,400 and Residential Tax Class $376,600; and

• $408,000 for the 2019 taxation year with an apportionment breakdown of Managed Forest Tax Class $35,400 and Residential Tax Class $372,600.

4The Appellants have filed appeals for the 2016, 2017, 2018 and 2019 taxation years with the Assessment Review Board (the “Board”), pursuant to s. 32; s. 34; and 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 in the range of $329,000 and $359,000. At this hearing, MPAC takes the position that its assessed values should be $429,000 for the 2016 taxation year; and $418,000 for the 2017, 2018 and 2019 taxation years. The assessments for July and August 2016 will be the determined by the current value minus the original returned assessment of $56,000.

5Pursuant to s. 40.(11) of the Act, the City of Sault Ste Marie (the “City”), is a party to this proceeding. However, the City had filed no disclosure with the Board and no one appeared on their behalf.

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, in this proceeding, this ground for appeal is not in issue.

7At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds:

• The current value of the Subject Property for 2016 taxation year is $333,000. The supplementary assessment effective July 1, 2016 is set at $277,000 ($333,000 – the returned assessment of $56,000). Therefore, the Board reduces the s. 34 assessment from $455,000 to $277,000, effective July 1, 2016; and the s. 32 assessment from $511,000 to $333,000, effective September 1, 2016.

• Current Value of the Subject Property for 2017, 2018 and 2019 taxation years is $341,000. Therefore, the Board reduces the s.32 assessment from $498,000 to $341,000 effective January 1, 2017; reduces the returned assessment of $412,000 to $341,000 for the 2018 taxation year; and reduces the returned assessment from $408,000 to $341,000 for the 2019 taxation year.

Apportionment breakdown for the 2018 taxation year is as follows:

Managed Forest Tax Class from $35,400 to $35,400

Residential Tax Class from $376,600 to $305,600

Total from $412,000 to $341,000

Apportionment breakdown for the 2019 taxation year is as follows:

Managed Forest Tax Class from $35,400 to $35,400

Residential Tax Class from $372,600 to $305,600

Total from $408,000 to $341,000

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:

3. For the period consisting of the four taxation years from 2013 to 2016, land is valued as of January 1, 2012.

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.

13Section 32(1) of the Act states:

Correction of errors, etc., in assessment roll

32 (1) Despite the delivery of any notice provided for under this Act, the assessment corporation at any time before the time fixed for the return of the assessment roll may correct any defect, error, omission or misstatement in any assessment and alter the roll accordingly.

14Section 34 of the Act states:

Supplementary assessments to be added to tax roll

34 (1) 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;

(c) Repealed:

(d) a pipeline increases in value because it ceases to be entitled to the reduction provided for in subsection 25 (9),

the assessor may make the further assessment that may be necessary to reflect the change, and upon receiving notice of the further assessment, the clerk of the municipality or, in the case of land in non-municipal territory, the Minister shall enter a supplementary assessment on the tax roll and the amount of taxes to be levied thereon shall be the amount of taxes that would have been levied for the portion of the taxation year left remaining after the change occurred if the assessment had been made in the usual way.

ISSUES

15The issues to be determined in these appeals are:

1. The correct current value of the Subject Property for the 2016 taxation year;

2. The correct value of the supplementary assessment effective July 1, 2016; and

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

Description of the Subject Property

16The Subject Property is a two-storey detached single-family dwelling (not on water), located at 109 Town Line Road, in the City of Sault Ste Marie. The Subject Property was built in 2016, with a total building area of 2,442 square feet (“sq. ft.”), and a total lot size of 41.63 acres.

DISCUSSION, ANALYSIS AND FINDINGS

The correct Current Value of the Subject Property for the 2016 Taxation Year

MPAC’s Evidence

17Pierre LeFebvre presents a Valuation Report, dated July 16, 2018 (“Valuation Report”) which he prepared and testifies to the information contained in the report.

18Mr. LeFebvre states that the Subject Property was inspected on June 22, 2018, and confirmed that the measurements, data, and classification are correct.

19Mr. LeFebvre testifies that the returned assessment includes a negative 5% adjustment for the poor water quality, a negative 12% market adjustment and a negative 25% for low lying and wet lands for the Subject Property. Mr. LeFebvre states that the Subject Property was approved for Managed Forest designation effective January 1, 2018 and that the assessed value is apportioned accordingly as stated above.

20In support of current value, Mr. LeFebvre states that he relies on the Direct Comparison Approach to value and presents an analysis of the sales of six suggested comparable properties which occurred in 2009 to 2011. Mr. LeFebvre testifies that he had difficulties finding suggested comparable properties with new structure like the Subject Property. He states that four of the six suggested comparable properties presented are in the same homogeneous neighbourhood as the Subject Property and the remaining two are from neighbouring area. The analysis contained both actual and time-adjusted sale prices.

21These six suggested comparable properties are located at 1451 Old Garden River Road, sold in 2010 for $335,000 (time-adjusted sale price of $381,095); 1075 Fourth Line E, sold in 2010 for $430,000 (time-adjusted sale price of $482,985); 288 Sixth Line E, sold in 2009 for $275,000 (time-adjusted sale price of $325,332); 1039 Allens Side Road, sold in 2010 for $255,000 (time-adjusted sale price of $284,623); 1695 Third Line W, sold in 2011 for $315,000 (time-adjusted sale price of $321,327); and 953 Airport Road, sold in 2010 for $258,100 (time-adjusted sale price of $282,756) . The sale prices reflect a time-adjusted sales range of $282,756 to $482,985.

22Mr. LeFebvre testifies that of the six sales, the sale 1075 Fourth Line E, sold in 2010 at a time-adjusted sale price of $482,985 represents the upper range, while the remaining five sales represents the lower range ($282,756 to $381,095). Mr. LeFebvre testifies that when the sale prices are adjusted for differences in (quality, sizes, ages, and other amenities) he estimates the market value for the Subject Property to be $429,000.

MPAC’s Submissions

23Based on the above analysis, MPAC argues that the current value is $429,000.

24Based on this value, Mr. LeFebvre submits that the s. 32 assessment should be $429,000 effective September 1, 2016; and the s. 34 assessed value should be $373,000 ($429,000 - $56,000 the original returned assessment for land only) effective July 1, 2016.

25Mr. Lefebvre is of the view that further adjustments are not required because the returned assessment for the Subject Property includes negative adjustments for the poor water quality, market adjustment and for low lying and wet lands as stated above.

Appellants’ Evidence

26The Appellants present the same evidence for the 2016, 2017, 2018 and 2019 appeals.

27The Appellants testify that they moved into the Subject Property in September 2016 and items such as eaves-trough, deck, lights, landscaping, patio rails, paved driveway, garage and the second bathroom were not completed. The Appellants testify that the only work completed as of now is the front porch and the driveway towards the road. The Appellants state that the water supply to the Subject Property is by means of a well and that the water is unfit for consumption (yellow, with high levels of iron) and for washing household materials and clothing. The Appellants state that they have tried many suggested measures to correct the water problem with little success. To demonstrate the issues, the Appellants provide photographs, a bottle of the well water and a note from Laura Paquette, Owner/Operator, Paquette’s Confectionery and Coin wash dated August 19, 2018 stating that the Appellants have been using their laundry facility on and off since they re-opened.

28The Appellants present a letter dated August 29, 2017 from Amanda Hopkin, Associate Insurance Advisor, Palmerio Insurance Ltd. stating that the replacement cost for the Subject Property is $406,000. The Appellants argue that the cost to build the Subject Property is significantly lower than the insurance replacement cost, because much of the work was done by them.

29The Appellants also argues that the Subject Property is negatively impacted by limited municipal services (street lights, water etc.), because it is in a rural area.

30In support of current value, the Appellants present the opinion of two realtors in 2017. The first opinion is from Bill Fraser, Sutton Real Estate with an estimate of $329,000; and the second is from Mike Nystedt, Exit Real Estate with an estimate of $359,000. The Appellants state that both realtors agreed that the house would needs a garage, other items such as landscaping and a deck to sell.

Appellants’ Submissions

31Based on the above evidence, the Appellants are of the view that the correct current value should be in the range of $329,000 and $359,000.

Findings on Current Value for 2016 taxation year

32Under 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.

33Regarding the difficulties expressed by both MPAC and the Appellants of finding suggested comparable properties with new structure as the Subject Property, the Board accepts their concerns and relies on the sales and opinion of values presented into evidence to arrive at a determination of current value. The Board also relies on the sale price ranges as opposed to the cost per sq. ft., because of the many differences (size, quality, secondary structures, age etc.) to the Subject Property.

34In regard to the Appellants’ argument that the Subject Property is negatively impacted by limited municipal services, and unfinished items as eaves-trough, deck, lights, landscaping, patio rails, paved driveway, garage and the second bathroom, the Board agrees that these unfinished items and limited services would likely have a negative impact on the value of the Subject Property, however, the Appellants present no quantitative evidence to assist the Board in its determination.

35Regarding the quality of the well water, the Board accepts the Appellants concern that the water quality is not good for consumption. As no evidence has been presented to show that the suggested comparable properties have similar water issues, therefore, the Board accepts MPAC’s negative 5% adjustment and will apply a reduction to the finding of current value.

36Regarding the opinion of values presented by Appellants which were obtained from Bill Fraser, Sutton Real Estate with an estimate of $329,000; and Mike Nystedt, Exit Real Estate with an estimate of $359,000, the Board will consider these estimated values and the sales presented into evidence in deciding current value.

37In reviewing the six suggested comparable properties presented by MPAC, the Board finds 1451 Old Garden River Road, sold in 2010 at a time-adjusted sale price of $381,095 to be the best evidence in terms of total site area, total building area, age and quality to the Subject Property.

38Although a second sale of 1451 Old Garden River Road in 2012 at a sale price of $350,000 was not presented in support of the current value for the valuation date of January 1, 2012, the Boards considers this sale because it occurred in the valuation year and therefore, is an appropriate sale to consider. This sale was presented in support of current value for the 2017, 2018 and 2019 in MPAC’s valuation report. Based on this information and without a time-adjusted sale price for the valuation date of 2012, the Board finds that the Subject Property is likely to sell at that same price of $350,000, because it is the best evidence in terms of lot size, total building area, age and quality.

39In reviewing the evidence (the opinions of the Realtors and the open market sales) presented in support of current value, the Board finds the open market sale price of $350,000 to be the best evidence as opposed to opinions of the Realtors with a range of $329,000 - $359,000. The Board notes that the open market sale falls within the Realtors suggested range of values. Therefore, the Board finds the current value is $350,000.

40As stated above, the well water of the Subject Property is unfit for consumption. The Board accepts MPAC’s negative 5% adjustment and applies it to the sales value of $350,000 to arrive a final current value of $333,000 rounded ($350,000 - $17,500).

41Based on all the above evidence the Board finds the current value for the 2016 taxation year is $333,000.

DISCUSSION, ANALYSIS AND FINDINGS

The Correct Current Value for the Subject Property for the 2017, 2018 and Deemed 2019 Taxation Years

MPAC’s Evidence

42As stated above, Mr. LeFebvre testifies that there are no sales of newer homes as the Subject Property in the homogeneous area and surrounding neighbourhood. Therefore, he relies on six sales which occurred over the period 2012 to 2015.

43These six sales of suggested comparable properties are in the same homogeneous area as the Subject Property and neighbouring areas. These six suggested comparable properties are located at 1451 Old Garden River Road, sold in 2012 for $350,000 (time-adjusted sale price of $358,587); 1511 Maki Road, sold in 2015 for $365,000 (time-adjusted sale price of $366,253); 1348 Maki Road, sold in 2012 for $324,000 (time-adjusted sale price of $331,950); 105 Hood Street, sold in 2014 for $340,000 (time-adjusted sale price of $342,879); 856 Airport Road, sold in 2014 for $235,000 (time-adjusted sale price of $237,287); and 904 Airport Road, sold in 2014 for $305,000 (time-adjusted sale price of $308,163).

44The sale prices of the above six sales reflect a time-adjusted sales range of $237,278 to $366,253. Based on the time-adjusted sale price of $366,253 for the most similar properties (1511 Maki Road), Mr. LeFebvre is of the view that the value of the Subject Property should be higher at $418,000, because it is newer and for other changes to the data based on an inspection.

MPAC’s Submissions

45Based on the above analysis, MPAC argues that the current value should be $418,000.

Appellants’ Evidence

46As stated above, the Appellants present the same evidence for 2017, 2018 and 2019 taxation years.

Appellants’ Submissions

47Based on the evidence, the Appellants are of the view that the current value should be in the range of $329,000 and 359,000.

Findings on Current Value for 2017, 2018 and Deemed 2019 Taxation Years

48As stated above the Appellants present the same evidence for both the 2012 and 2016 valuation dates.

49Regarding the opinion of values presented by Appellants which were obtained from Bill Fraser, Sutton Real Estate with an estimate of $329,000; and Mike Nystedt, Exit Real Estate with an estimate of $359,000, the Board will consider these estimated values and the sales presented into evidence in deciding current value.

50In reviewing at MPAC’s sales of suggested comparable properties, the Board again finds the best evidence to be the sale of 1451 Old Garden River Road, sold in 2012 at a time-adjusted sale price of $358,587. This suggested comparable property is the best evidence in terms of age, total lot size, total building area and quality.

51In reviewing the evidence (the opinions of the Realtors and the open market sales) presented in support of current value, the Board finds the open market sale price of $359,000 to be the best evidence as opposed to opinions of the Realtors with a range of $329,000 - $359,000. The Board notes that the open market sale falls within the Realtors suggested range of values. Therefore, the Board finds the current value is $359,000.

52As stated above, the well water of the Subject Property is unfit for consumption. The Board accepts MPAC’s negative 5% adjustment and applies it to the sales value of $359,000 to arrive a final current value of $341,000 rounded ($359,000 - $17,950).

53Based on all the above evidence, the Board finds the current value for the 2017, 2018 and 2019 taxation years is $341,000.

DECISION

Current Value for 2016 Taxation Year

54The Board finds the current value of the Subject Property for the 2016 taxation year is $333,000. Based on this evidence, the Board finds the following:

(a) That the supplementary assessment value is $277,000 ($333,000 – original returned assessment of $56,00) effective July 1, 2016; and

(b) That the s. 32 assessment value is $333,000 effective September 1, 2016.

Therefore, the Board reduces the s. 34 assessment value from $455,000 to $277,000, effective July 1, 2016; and reduces the s. 32 assessment value from $511,000 to $333,000, effective September 1, 2016.

Current Value for 2017, 2018 and Deemed 2019 Taxation Years

55The Board finds the current value of the Subject Property for the 2017, 2018 and 2019 taxation years is $341,000.

56Therefore, the Board reduces the s. 32 returned assessment from $ 498,000 to $341,000 effective January 1, 2017; the s. 40 returned assessment from $412,000 to $341,000 for the 2018 taxation year; and the s. 40 returned assessment from $408,000 to $341,000 for the 2019 taxation year.

57As stated above, the Subject Property is approved for Managed Forest classification effective January 1, 2018. Therefore, the apportionment breakdown is as follows:

Apportionment breakdown for the 2018 taxation year is as follow:

Managed Forest Tax Class from $35,400 to $35,400

Residential Tax Class from $376,600 to $305,600

Total from $412,000 to $341,000

Apportionment breakdown for the 2019 taxation year is as follow:

Managed Forest Tax Class from $35,400 to $35,400

Residential Tax Class from $372,600 to $305,600

Total from $408,000 to $341,000