Sylvia Ross v. Municipal Property Assessment Corporation, 2019 CanLII 57543

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

June 20, 2019

FILE NO.:

WR 160843

Assessed Person(s):

Sylvia Ross

Appellant(s):

Sylvia Ross

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 28

Respondent(s):

City of North Bay

Property Location(s):

Plan M296 Lot 17 PCL10611

Municipality(ies):

City of North Bay

Roll Number(s):

4844-050-078-26800-0000

Appeal Number(s):

3256696

Taxation Year(s):

2017

Hearing Event No.:

713574

Legislative Authority:

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

Heard:

May 30, 2019 by telephone conference call

APPEARANCES:

Parties

Representative

Sylvia Ross

Self-represented

MPAC

Louise St. Jean

City of North Bay

No one appeared

DECISION OF THE BOARD DELIVERED BY JOANNE LAWS

OVERVIEW

1Sylvia Ross (the ‘Appellant”) is the owner of Plan M296 Lot 17 PCL10611 (“Lot 17”, or, the “Subject Property”), which is a vacant residential lot abutting the west side of Ms. Ross’ home located at 818 Ski Club Road in 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, the Municipal Property Assessment Corporation (“MPAC”) is required to assess this value as of the valuation date, January 1, 2016 (“current value”).

3MPAC has returned an assessment of $86,000 for the 2017 taxation year.

4The Appellant filed an appeal for 2017 taxation year 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 is $30,000. MPAC took the position that the correct current value is $68,000, which is less than the amount returned.

5Pursuant to s. 40(11) of the Act, the City of North Bay is a party to this proceeding. However, it did not advise the Board of its position on the issues raised in these appeals and no one appeared at the hearing on its behalf.

6Once the current value has been determined, s. 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 Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.

7At the completion of the hearing, I reserved my decision. For the reasons that follow, I find that for the 2017 taxation year, the current value of the Subject Property is $30,000. Accordingly, I am reducing the returned assessment from $86,000 to $30,000 in the residential property class.

Relevant Legislation

8The Act states that:

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.

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

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.…

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.

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 is the Correct Current Value for the 2017 Taxation Year?

MPAC’s Evidence

9Louise St. Jean represented MPAC and gave evidence in support of the assessment corporation. She entered into evidence her Valuation Report dated August 17, 2018 as well as an undated Equity Report.

10Ms. St. Jean described the Subject Property as vacant residential lot measuring 65 feet of effective frontage and 208 feet of effective depth for a total area of 0.32 acres. She further describes the Subject Property as having year-round road access, a steep slope and a light traffic pattern. She testified that municipal services of water, sanitary and hydro are available, however, the lot is not currently serviced.

11Ms. St. Jean used the direct sales comparisons method in order to support her recommended current value of $68,000. She submits there are only two recent vacant land sales, comparable to the Subject Property, during the period of January 1, 2012 to December 31, 2018. The first sale, 39 Dellandrea Drive, sold for $60,000 in February 2016 and the second sale, 19 Dellandrea Drive sold for $75,000 in September 2012. Both are located a half a kilometer from the Subject Property and were un-serviced at the time of their sales. Ms. St. Jean said her recommended value of $68,000 is the result of adjusting the Subject Property for a steep slope and then applying the average assessment to sale ratio from the two sales.

12In addition, Ms. St. Jean stated that she relied on the actual sale prices, rather than time adjusted sale prices, because it was very difficult to determine an accurate time adjustment factor due to the limited number vacant lot sales.

MPAC’s Submissions

13Relying on its evidence, MPAC submits that the correct current value for the 2017 taxation year is $68,000.

14Ms. St. Jean submits that her two sale properties are relatively similar to the Subject Property because, at the time of the sales, they were both vacant, un-serviced lots and they are located in the same MPAC neighbourhood of B04-4 as the Subject Property. She argues that both of the sale properties are inferior to the Subject Property because, despite being located on a street with no traffic adjustments and having level topography, they have smaller lots.

15In response to the Appellant’s sale comparable, Lot 18 on Surrey Drive, Roll Number 4844-050-077-46200-0000 (“Surrey Drive”), MPAC argues it is not a valid sale and cannot be used to determine current value in accordance with s. 1 of the Act because it was not unencumbered. In correspondence to the Appellant, Ms. St. Jean stated she investigated this sale and determined that, in addition to the $36,000 purchase price, the purchasers assumed the development charge “which is the hook up price for services in the amount of $57,000” which the vendor had failed to pay. The $57,000 includes interest charges. However, at the hearing, Ms. St. Jean testified that the additional fee included all development costs including paving roads and bringing hydro, water and sewer services into the street. She did not testify that it was hook up charges. She agrees with the Appellant’s evidence that the Surrey Drive was listed for $94,900 but takes the position that the value of Surrey Drive is $93,000 ($36,000 plus $57,000).

16In response to the Appellant’s sale comparable on Thelma Avenue, Roll Number 4844-040-059-34270-000 (“Thelma Avenue”), MPAC argues it, too, is not a valid sale. Based on her investigation of the sale, Ms. St. Jean argued that it was not exposed to the open market. She testified that the vendor, Gap Construction, had financial problems and the purchase price was determined by the value of an estate sale of another property. She also said that this property has granite bedrock which will cost $15,000 to blast and that the purchaser is planning to build a back-split home with no basement. She argues that Thelma Avenue is not as desirable a location as Ski Club Road. She estimates that the lot value is approximately $41,000 which is the median sale price of four other lots that have sold on Thelma. Ms. St. Jean did not provide the sale evidence of those four sales.

Appellant’s Evidence

17Sylvia Ross represented herself. Ms. Ross argued that both the returned assessed value of $86,000 and MPAC’s recommended value of $68,000 are too high.

18Ms. Ross said she has lived in her home since 1969 and purchased the abutting Subject Property in 1971. She testified that it was not economically feasible to develop the Subject Property due to the high rock content and steep slope which was reflected in the purchase price of less than $2,000. Over the years, she applied truckloads of soil onto the Subject Property to cover the bedrock, levelling an area for car parking. Currently there is a driveway and a small shed on the Subject Property. She testified that the added soil belies its rocky state and that it would be difficult and expensive to develop.

19Ms. Ross describes the Subject Property as “serviceable but not serviced” for water and sewage. She testified that both water and sewer are located on Ski Club Road, but they are located 27 feet from her property line. She submitted an October 31, 2018 email from Glen W. Cameron C.E.T., Engineering Technician with the City of North Bay in which he confirms that if rock is found, it will require blasting which may add as much as $30,000 “on top of the standard rates the city would charge to generate the service trench and connect the services” to a property and that all costs are passed on to the property owner.

20Ms. Ross argues that the usable or developable area of the lot is much smaller than the lot size. The toe of the Cambrian Shield is located at the rear of the Subject Property which has a steep slope and there are set-backs on three of the four sides. Ms. Ross submitted a sketch showing the set-backs on the three sides of the lot as well as steep slope area at the rear. She submits that the actual usable space is 2,430 square feet (“sq. ft.”) which is much smaller than MPAC’s two sale properties that have 4,300 and 4,900 sq. ft. of level topography.

21Ms. Ross presented two sales. The first, Lot 81 on Surrey Drive, was purchased in November or December 2016 for $36,000 and has a lot measuring 150 feet by 150 feet. Ms. Ross said this lot is superior to the Subject Property because it is in a prime neighbourhood with architecturally designed homes, underground services to the lot line, a panoramic view of North Bay and Lake Nippissing and the street has little traffic. Ms. Ross submitted the Agreement of Purchase and Sale which contains the clause: “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.” Ms. Ross also submitted a copy of By-Law No. 2013-160 which only deals with water and sewer costs and specifies that the sewer and water connection charge for Lot 81 is $40,157.76, that this cost will be paid by the owner of the land prior to connecting the services and that the costs will increase by compound interest, over time, beginning January 1, 2014. Both Ms. Ross and Ms. St. Jean agree that the cost incurred by the purchaser in the 2016 sale was $57,000. Ms. Ross also submitted the real estate listing and a Land Registry document supporting the sale value of $36,000.

22The second sale, Thelma Avenue, sold for $25,000 in February 2018 and Ms. Ross acknowledges the vendor had financial problems. She points to MPAC’s estimated cost of $15,000 to blast the lot even though the purchaser plans to build a house without a basement. She testified that, unlike the Subject Property, Thelma Avenue has services to the lot line. In addition, she disagrees with Ms. St. Jean who said it was not an open market sale, testifying that she has seen the listing.

23Ms. Ross also testified that as of 2018 the Subject Property was combined with 818 Ski Club Road under one roll number. Ms. Ross’ undisputed testimony is that both the Municipality and MPAC agreed that Lot 18’s value within the newly combined roll number is $30,000. This, she argues, is the value of the Subject Property.

Appellant’s Submissions

24Relying on her evidence, the Appellant submits that the correct current value for 2017 taxation year is $30,000.

25The Appellant argues that the rocky state of the Subject Property and resulting costs to develop it would be taken into consideration by a purchaser and, therefore, such costs should be reflected in the current value. She points to MPAC’s submissions regarding the Thelma Avenue sale and argues that, regardless of whether it is an open market sale, MPAC acknowledges there is a cost to blasting a rocky property when developing it, that the Subject Property will require blasting costs in order to develop it and that such costs would be reflected in the market value.

26The Appellant argues that MPAC’s estimated current value of $41,000 for Thelma Avenue reflects what a purchaser might pay for a rocky lot that does not have the additional costs to bring water and sewer services to the lot line.

27The Appellant argues that the Subject Property’s usable area is much less than the actual lot size due to the steep slope of the toe of the Cambrian Shield and the setbacks.

28The Appellant argues that the cost to provide the Subject Property with water and sewer services, including additional blasting costs for the bedrock, would be factored in to the market price, and, therefore should be reflected in the current value.

29The Appellant argues that MPAC’s two sale properties are not directly comparable to the Subject Property. They have flat topographies, there is no mention that the lots have bedrock and MPAC’s photographic evidence show no visible rock formations in the area and the water and sewer services are located at the lot lines. The Appellant also argues that it is easier to develop flat lots than a lot with a steep slope. She also argued that, unlike the Subject Property, the Dellandrea properties have buried hydro wires which make them more attractive.

30With regard to the usable or developable lot area, the Appellant argues that the Subject Property is smaller than either of MPAC’s sale properties which have level topography and no visible bedrock. She further argues that if someone wanted more developable space it would be costly to blast the rock, ensure the Cambrian Shield is stable and manage the water run-off.

31The Appellant argues that the Surrey Drive sale value of $36,000 reflects the value of an un-serviced lot.

Findings on Current Value

32The best way of determining the current value of a property is if it has recently been sold as it provides a market-tested value for the property which is its current value at the time of the sale. Where a sale has not taken place anywhere near the valuation day, as here, the Board must look to other methods of proving current value. The direct sales comparison method is a “tried and true” method of determining value in relation to residential properties. The Board must base its decision on the evidence provided by the parties and, in this case, the evidence of value comes from comparing the Subject Property with other vacant lots near the Subject Property.

33The parties presented four sales which I have outlined in the chart below.

Property

Site Area

(feet)

Sale Date

Sale Price

Subject Property

65 x 208

N/A

N/A

39 Dellandrea Drive

65 x 120

February 2016

$60,000

19 Dellandrea Drive

60 x 120

September 2012

$75,000

Surrey Drive

150 x 160

November 2016

$36,000 land + $57,000 water and sewer costs

Thelma Avenue

45 x 113

February 2018

$25,000

34I agree with Ms. Ross that a vacant lot’s prospective purchaser will consider topography, useable area and the costs to develop, which include the cost to bring water and sewer services to the lot line, plus any extraordinary costs such as blasting to obtain those services or to build on the lot.

35I also agree with Ms. Ross that both lots on Dellandrea Drive are superior to the Subject Property. They have level topography. I received no evidence that there is bedrock or that the water and sewer connections are not at the property lines. Although they have smaller lots, the buildable area is greater and they are located on a street with less traffic. Therefore, I find that the Subject Property would sell for less than lowest price sale price of $60,000.

36Thelma Avenue is a smaller lot located in a less prestigious neighbourhood which sold for $25,000. Despite Ms. Ross’ testimony that it was listed on the open market, the parties agree that the vendor had financial difficulties, which is sufficient reason to exclude this sale. As such I am disregarding this sale as an indication of the Subject Property’s current value.

37Regarding Surrey Drive, MPAC argues it was an encumbered sale and, therefore, not a valid sale pursuant to the Act. Section 1 of the Act provides that 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.” In this instance, we have a sale of $36,000 for the vacant lot and $57,000 for the cost plus interest charges for providing water and sewer services. I agree with the Appellant that it is reasonable, in this instance, to accept the land sale as a direct comparable to the Subject Property because the Subject Property does not have water and sewer services at the lot line and because the evidence shows that the cost for the work to do so will be significant.

38I reject Ms. St. Jean’s argument that the $57,000 is an all-encompassing development fee. By-Law 2013-160 specifically addresses only water and sewer issues.

39I accept Ms. Ross’ testimony that Surrey Drive is in a superior neighbourhood to the Subject Property and that it has less traffic. In addition, Surrey Drive has a larger lot with more than twice the frontage of the Subject Property. Based on the above, I find that the Subject Property would not sell for more than $36,000.

40For the above reasons, I find that it is reasonable to conclude that the correct current value of the Subject Property is the Appellant’s suggested value of $30,000.

DECISION

41The correct current value of the Subject Property is $30,000 for the 2017 taxation year.

42Accordingly, the assessment is reduced from $86,000 to $30,000 for the 2017 taxation year.