Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 10, 2019 FILE NO.: WR 161195

Assessed Person(s): Brenda Alice Koski; Wayne Arthur Koski Appellant(s): Brenda Alice Koski; Wayne Arthur Koski Respondent(s): Municipal Property Assessment Corporation (“MPAC”), Region 32 Respondent(s): Municipality of Greenstone

Property Location(s): 107 Cedar Crescent Municipality(ies): Municipality of Greenstone Roll Number(s): 5876-710-001-11700-0000 Appeal Number(s): 3260568, 3315237 and 3368282 Taxation Year(s): 2017, 2018 and 2019 Hearing Event No.: 716269

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

Heard: June 13, 2019 in Geraldston, Ontario

APPEARANCES:

Parties	Representative
Brenda Alice Koski; Wayne Arthur Koski	Self-represented
MPAC	Tom Whalley
Municipality of Greenstone	Jack Kuzminski (municipality observed but did not participate)

DECISION OF THE BOARD DELIVERED BY JENNIFER GRIFFITH

BACKGROUND

1Brenda Alice Koski and Wayne Arthur Koski (the “Appellants”) are the owners of 107 Cedar Crescent (the “Subject Property”), which is in the Municipality of Greenstone.

2MPAC has assessed the current value of the Subject Property at $208,000 for the 2017, 2018 and 2019 taxation years.

3The 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. However, the Appellants present no opinion of what the correct value should be. At this hearing, MPAC takes the position that its assessed values should be $208,000 for the 2017, 2018 and 2019 taxation years.

4Section 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 required and that the equitable value should be $196,000. The Appellants argue that the Subject Property is assessed too high as compared to similar lands in the vicinity. However, the Appellants did not assert a position on equity because they claim that they are not familiar with the process. Therefore, this issue will be explored by the Board.

5At 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 is $177,000 for the 2017, 2018 and 2019 taxation years, however, the Board finds that a reduction in the value to $167,000 is required to make it equitable. Therefore, the Board reduces the returned assessment from $208,000 to $167,000 for the 2017, 2018 and 2019 taxation years.

RELEVANT LEGISLATION

6Section 1 of the Act states:

“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.

7Section 19.(1) of the Act states:

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

8Section 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.

9Section 40.(17) of the Act states:

40. (17) Burden of Proof - 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.

10Section 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

11The issues to be determined in these appeals are:

1. The correct current value of the Subject Property for the 2017, 2018 and 2019 taxation years; and
2. Whether there should be an equitable reduction of the current value of the Subject Property pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this reduction should be.

Description of the Subject Property

12The Subject Property is a one-storey detached single-family dwelling (on water), located at 107 Cedar Crescent, in the Town of Longlac, in the Municipality of Greenstone. The Subject Property is in a residential subdivision and backs onto Long Lake. It was built in 1973, with a total building area of 1,370 square feet (“sq. ft.”), and a total lot size of 0.38 acre.

DISCUSSION, ANALYSIS AND FINDINGS

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

MPAC’s Evidence

13Tom Whalley presents a Valuation Report, dated April 30, 2018 (“Valuation Report”) which he prepared and testifies to the information contained therein.

14Mr. Whalley states that he inspected the exterior of the Subject Property in July 2018, and confirmed that the measurements, data, and classification are correct. He testifies that the value of the small shed on the Subject Property with 200 square feet (“sq. ft.”) was not included in the returned assessment.

15Mr. Whalley testifies that the Municipality is composed of a group of small towns, spanning a large geographic area from Lake Nipigon in the west, to Longlac and Caramat in the east and North to the Town of Nakina. He states that the Town of Longlac is located on the Trans-Canada Highway (On. Hwy 11) and is the eastern regional hub of Greenstone.

16In support of current value, Mr. Whalley 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 over the period of 2012 to 2017. He states that three of the six suggested comparable properties are waterfront properties located in the same homogeneous neighbourhood as the Subject Property on Long Lake; and the remaining three are waterfront properties on Kenogamisis Lake approximately 17 kilometers from the Subject Property. The analysis contains both actual and time-adjusted sale prices.

17These six suggested comparable properties are located at 113 Bayview Street, sold in 2015 at a time-adjusted sale price of $176,767; 119 Bayview Street, sold in 2017 at a time-adjusted sale price of $225,673; 109 Bayview Street, sold in 2015 at a time-adjusted sale price of $197,345; 22 Camp 25 Road East, sold in 2012 at a time-adjusted sale price of $345,238; 14 Camp 25 Road East, sold in 2015 at a time-adjusted sale price of $283,233; and 16 Camp 25 Road East, sold in 2016 at a time-adjusted sale price of $251,873. The sale prices reflect a time-adjusted sale range from $176,767 to $345,238.

18Mr. Whalley testifies that of the six sales, the three sales at 113 Bayview Street; 119 Bayview Street; and 109 Bayview Street are the most comparable, because they are located close and on the same lake as the Subject Property. Based on these three sales, Mr. Whalley estimates the current value to be $208,000 for the Subject Property.

19On cross-examination and in response to an issue that the returned assessment of $208,000 for the valuation date January 1, 2016 increased by 131% over the previous assessment of $90,000 for the valuation date of January 1, 2012. Mr. Whalley testifies that due to a lack of sales of waterfront properties in previous assessment cycles, there was no sales evidence to demonstrate differences in the value of waterfront and non-waterfront properties. After the previous assessment cycle (valuation date of January 1, 2012) there were sales of waterfront properties which demonstrate values significantly higher than non-waterfront properties, and this led to the increases in assessment values for the current assessment cycle (valuation date January 1, 2016).

20Mr. Whalley also explains that information about assessment values on MPAC’s website relates to the municipality and not specific to the Subject Property’s neighbourhood.

MPAC’s Submissions

21Based on the above evidence, MPAC argues that the current value is $208,000.

Appellants’ Evidence

22The Appellants testify that the Subject Property is assessed too high as compared to similar lands in the vicinity. They testify that the returned assessment increased by 131% over the previous assessment cycle (valuation date of January 1, 2012). The Appellants state that they agree that the assessed value of waterfront properties should be increased over the previous cycle but assert that an increase from $90,000 to $208,000 is outrageous.

23The Appellants argue that the assessed value of the Subject Property is negatively impacted by the fact that the shoreline is undeveloped (no docks, no direct access, rocky) and that an adjustment is warranted.

24In support of their argument that the increase in assessment is too high, the Appellants cited excerpts from MPAC’s website which indicate that property values in Greenstone went up by 9%; assessment of a typical resident is $53,000; assessment of a typical waterfront property is $107,000; housing prices in general have declined due to loss of forestry jobs in the area; and that recent mining developments have spurred a housing price recovery.

25The Appellants also believe that the assessment is too high because house prices in the Town of Longlac are negatively impacted by mill closures and demolition; and limited job opportunities, because of fewer government services, fewer retail and entertainment businesses in the neighbourhood.

26The Appellants are of the view that sales should not be the only determinant of current value. They believe that a different approach to assessing properties should be considered to address the many issues cited above and to address the drastic difference in assessment values (e.g. waterfront vs. non-waterfront, size etc.).

27In support of their argument that waterfront properties are assessed significantly higher than non-waterfront properties, the Appellants present six waterfront properties at 105, 109, 111, 113, 117 and 119 Bayview Street with an average assessment of $204,000; and seven non-waterfront properties at 102, 110, 111, 112, 113, 114 and 115 Cedar Crescent (same street as the Subject Property) with an average assessment of $87,000 to demonstrate the significant difference in assessment.

28Although five of the above seven non-waterfront properties on Cedar Crescent sold in 2014 and 2017, (outside of the valuation date of January 1, 2016) the Appellants testify that the sales are presented to demonstrate the impact of the depressed economy and not for comparison to the Subject Property. These five properties sold at an average sale price of $57,000, which is significantly lower than the average assessed values of $87,000.

29The Appellants present another six waterfront properties at 6,14, 16, 24 and 32 Margo Lake and 21 Camp 25 Road East which they believe are superior to the Subject Property, to show that they are assessed significantly lower because of their location in cottage country (different homogeneous area). These six suggested comparable properties have an average assessment of $137,000, compared to the Subject Property at $208,000 in the Town of Longlac.

30In support of current value, the Appellants present three sales of suggested comparable properties (two of which are presented by MPAC) in the same homogeneous neighbourhood as the Subject Property. They are located at 109 Bayview Street, sold in 2016 for $172,500; 105 Bayview Street, sold in 2016 for $308,000; and 113 Bayview Street, sold in 2015 for $175,000. These sales demonstrate a range of $172,500 to $308,000 with a median sale price of $175,000.

Appellants’ Submissions

31Based on the above evidence, the Appellants are of the view that the correct current value should be lower than the returned assessment of $208,000. They offer no specific estimate of the correct current value.

Findings on Current Value for 2018 and 2019 taxation years

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.

33In reviewing MPAC’s six sales in support of current value, the Board does not rely on 119 Bayview Street, sold in 2017 at a time-adjusted sale price of $225,673: and 22 Camp 25 Road East, sold in 2012 at a time-adjusted sale price of $345,238, because the sale dates are too far removed from the valuation date of January 1, 2016 to be a true test of current value.

34The remaining four sales at 113 Bayview Street, sold in 2015 at a time-adjusted sale price of $176,767; 109 Bayview Street, sold in 2015 at a time-adjusted sale price of $197,345; 14 Camp 25 Road East, sold in 2015 at a time-adjusted sale price of $283,233; and 16 Camp 25 Road East, sold in 2016 at a time-adjusted sale price of $251,873 demonstrate a sale range of $176,767 to $283,233.

35Based on the above range, the Board finds that the Subject Property would sell at the lower end of the range which is at $177,000 rounded. The reason being, that the Subject Property is most similar in age, quality, lot size, total building area, un-renovated and on the same lake as the comparable property at 113 Bayview Street which represents the lower range. The Board will consider the value of $177,000 in its final determination of current value.

36In reviewing the Appellants’ three sales in support of current value at 109 Bayview Street, sold in 2016 for $172,500; 105 Bayview Street, sold in 2016 for $308,000; and 113 Bayview Street, sold in 2015 for $175,000. The Board finds that the sale prices demonstrates a sales range from $172,500 to $308,000 and with a median sale price of $175,000, which is very close to MPAC’s value. The Board finds that the Appellants’ three sales of suggested comparable properties were not sufficiently similar to allow for a meaningful quantifiable comparison to the Subject Property.

37Regarding the un-developed shoreline of the Subject Property, the Board finds that no quantitative evidence was presented to demonstrate the impact on the assessed value of the Subject Property. Therefore, the Board relies on the sales presented by both MPAC and the Appellant for the determination of current value.

38Regarding the excerpts from MPAC’s website. The Board accepts MPAC’s explanation that the excerpts as presented by the Appellants are not specific to the Subject Property and are general comments about the state of the economic situation in the municipality. Therefore, the Board relies on the sales presented by MPAC and the Appellants for the determination of current value.

39Regarding the impact of mill closures and demolition, limited job opportunities, fewer government services, fewer retail and entertainment businesses in the Town of Longlac, the Board finds that the sale prices of non-waterfront properties indicate significantly lower sale prices, whereas, waterfront property appears to be in demand and command higher sale prices in the open-market. This finding is supported by the five sales on Cedar Crescent (same street as the Subject Property) which sold in 2014 and 2017 at an average sale price of $57,000, compared to the average assessment of $83,000.

40Regarding the Appellants’ argument that waterfront properties are assessed higher than non-waterfront properties, the Board agrees and finds that the Appellants’ six waterfront properties demonstrate an average assessment of $204,000, compared to the above seven non-waterfront properties with an average assessment of $87,000. The Appellants testify that waterfront properties are in high demand and command a higher value than non-waterfront properties.

41Regarding the increase of 131% in assessment over the previous assessment cycle January 1, 2012. The Board finds that the Act clearly states that the assessment of land shall be based on current value, and that the valuation date for the 2017 through 2020 taxation years is January 1, 2016. In other words, this means that the assessment of land is directly related to the valuation day for each tax cycle and not to valuation days for previous tax cycles. There are many market influences or changes to a property that result in differences in assessed values from one valuation day to another valuation day in a different tax cycle. Therefore, current value must be proven through open-market sales evidence around each valuation day. Therefore, an analysis of the sales presented into evidence will determine what the correct current value is for the Subject Property.

42The Board also accepts MPAC’s evidence that the increase of 131% in assessment for the Subject Property for the January 1, 2016 valuation date, results in the fact that the Subject Property was assessed in the same manner as non-waterfront property in previous assessment cycles. MPAC explains that in previous assessment cycles the limited number of sales show no difference in the sale prices of waterfront and non-waterfront properties. MPAC states that demand for waterfront properties increase after the January 1, 2012 assessment cycle, resulting in higher sale prices. As a result, MPAC assessed waterfront properties differently to non-waterfront properties, based on sales evidence for the current assessment cycle (valuation date of January 1, 2016). The Board finds that the evidence before it demonstrates that waterfront properties sold significantly higher than non-waterfront properties after the previous assessment cycle (valuation date January 1, 2012). Therefore, the sales presented in evidence will be analyzed for the determination of the correct current value for the Subject Property.

43Regarding the difference in assessment values of waterfront properties (cottage country vs. city location), the Board finds that the evidence shows that waterfront properties located in city locations have been assessed higher than waterfront properties in cottage country. The fact that assessed values are influenced by many attributes (size, services, location, age, demand etc.) the Board relies on the open-market sales evidence of similar properties to test the correctness of the assessed value.

44Regarding the Appellants’ view that sales should not be the only determinant of current value, the Board disagrees that sales are the only determinant of current value. The Board finds that there are many influences (location, size, market conditions, quality, valuation date etc.) that are taken into consideration when determining current value.

45In reviewing all the evidence, the Board finds that MPAC’s four sales considered in paragraphs 34 and 35 for current value demonstrate the best evidence, because the characteristics of these suggested comparable properties sold provide for a meaningful comparison to the Subject Property. Although the Appellants present no characteristics for comparison to the Subject Property, two of their comparable properties (109 Bayview Street, sold in 2016 for $172,500; and 113 Bayview Street, sold in 2015 for $175,000) were also presented by MPAC and included in the determination of current value.

46Based on the evidence presented in paragraphs 34 and 35, the Board finds the current value is $177,000.

Whether there should be an Equitable Reduction of the Current Value Pursuant to s. 44(3)(b) of the Act, and, if so, what the amount of this Reduction should be.

MPAC’s Evidence

47MPAC presents an Equity Analysis Report in which the assessments of 30 comparable properties are compared to their respective time adjusted sale prices to determine the Assessment to Sales Ratio (“ASR”). The ASR is computed by dividing the assessed values of a property by its sale price.

48MPAC testifies that these 30 comparable properties are single family detached dwellings (on water) like the Subject Property; and seasonal/recreational dwelling (first tier on water), which sold over the period January 1, 2012 to April 27, 2018 and located within kilometres of the Subject Property. MPAC states that other physical attributes (building size, age, similar location and accessory structures) were considered in selecting these 30 properties.

49The analysis of these 30 comparable properties shows a Level of Appraisal (“LOA”) of 0.943 and a Coefficient of Dispersion of 13.1. Based on these findings, MPAC believes an equity reduction is required, because the similar properties in the vicinity have not been assessed at or near their current values.

MPAC’s Submissions

50Relying on its evidence, MPAC’s submits that an equitable reduction of the current value for the 2017, 2018 and 2019 taxation years is required. Applying the ASR to the current value of $177,000 results in an equitable value of $167,000 ($177,000 X 0.943).

51The Appellants present no equity report, although they believe that the Subject Property is assessed too high and not equitable to similar lands in the vicinity. The Appellants also state that this is their first time appealing their assessment and are not familiar with the process.

52In reviewing the above evidence, the Board accepts MPAC’s findings that an equity adjustment is required. Although the Appellants present no equity report, a few sales presented by the Appellants are included in MPAC’s report and contribute towards its findings.

53Based on all the evidence, the Board finds that an equity adjustment is required and finds that the equitable value is $167,000.

DECISION

54The Board finds the current value of the Subject Property for the 2017, 2018 and 2019 taxation years is $177,000 and finds that an adjustment to $167,000 is required for equity.

55Therefore, the Board reduces the returned assessment from $208,000 to $167,000 for the 2017, 2018 and 2019 taxation years.