Loconte v. Municipal Property Assessment Corporation, 2019 CanLII 7199

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 31, 2019

FILE NO.: WR 153093

Assessed Person(s): Dianne James

Appellant(s): Carmela Loconte

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 07

Respondent(s): Township of Minden Hills

Property Location(s): 10010 Bob Green Island

Municipality(ies): Township of Minden Hills

Roll Number(s): 4616-010-000-16910-0000

Appeal Number(s): 3236468 and 3292943

Taxation Year(s): 2017 and 2018

Hearing Event No. 698470

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

Heard: April 27, 2018 by telephone conference call

APPEARANCES:

Parties	Representative
Dianne James and Carmela Loconte	Frank Loconte
MPAC	Darren Burns
Township of Minden Hills	No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

REASONS

Background

1Carmela Loconte is the Appellant in respect of a property municipally known as 10010 Bob-Green Island (the “Subject Property”). The assessed person is Dianne James, who is not involved with this appeal. Ms. James is the registered owner of the Subject Property, although Ms. Loconte has possession.

2This Subject Property is a water-access single family detached residence located on Bob Lake in the Township of Minden Hills (“Township”) in the Haliburton Highlands recreational area. The residence is a seasonal-recreational building with 230 feet on Bob Lake and a depth of 250 feet, with just over one acre of land with southwest exposure. The residence is heated by electric baseboard heat. It was built in 2008. Ms. Loconte took possession in July, 2015.

3Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”), the assessment of the 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 (“current value”).

4MPAC has assessed the current value of the Subject Property at $590,000 for 2017 and $474,000 for 2018. MPAC made subsequent changes to the valuation following inspections which took place in 2016 and 2018. The final estimate of current value is $401,000 following the analysis of the Direct Comparison Approach and it is this value that MPAC is seeking.

5Carmela Loconte (the “Appellant”) has filed an appeal for taxation year 2017 (and has a deemed appeal for 2018) with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act. She was represented at the hearing by her spouse, Frank Loconte. It is their position that MPAC’s assessment of current value is too high and that the correct current value is $360,000.

6Pursuant to s. 40(11) of the Act, the Township of Minden Hills is a party to this proceeding. However, the Township did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the Township’s behalf.

7Section 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 taxes among property owners. MPAC takes the position that an equitable reduction is not required. The Appellant did not assert that an equitable reduction is required. Therefore, in this proceeding, this ground for appeal is not in issue.

8At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value assessment of the Subject Property for the 2017 to 2018 taxation years is $360,000. Pursuant to s. 44(3)(b) of the Act, an equitable reduction of this value is not required.

RELEVANT LEGISLATION

9Section 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.

10Section 19.(1) of the Act states:

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

11Section 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:

For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

12Section 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.

13Section 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.

ISSUE

14The issue to be determined on this appeal is the correct current value of the Subject Property for the taxation years 2017 and 2018.

DISCUSSION, ANALYSIS AND FINDINGS

MPAC’s Evidence

15Darren Burns represented MPAC and also presented evidence on behalf of MPAC. Mr. Burns authored the Valuation Report and the Equity Analysis Report which were submitted as documentary evidence to the Board.

16Mr. Burns gave a description of the Subject Property, which is a seasonal recreational property on an island shared with other seasonal residential properties. The dwelling was built in 1998, and the construction quality is deemed to be average, rated by MPAC a 6 out of 10. The building is primarily a log home, with no air conditioning. It has western exposure, and is 1,601 square feet (“sq. ft.”) in size. There is a first floor of 1,182 sq. ft., a second floor of 419 sq. ft., and an unfinished basement measuring 591 sq. ft. Mr. Burns pointed out that the Appellant’s filing of a Request for Reconsideration triggered a property inspection and a reduction in the current value assessment was made for the 2018 taxation year, when roll was returned with a current value assessment of $474,000. MPAC indicated that the reduction was based on the following: (a) the second door was a steel door and not a garden door as assessed; (b) the basement was unfinished; and (c) the topography was adjusted for a steep slope.

17Following a second inspection, including the interior of the Subject Property, further adjustments were made as a result of some measurements being corrected, and as a result of the fact that the oil tank was not certified. MPAC determined that a more appropriate current value would be $401,000, and MPAC is prepared to advocate for a Board decision showing a current value of $401,000 for each of 2017 and 2018. The Appellant is not prepared to accept that amount as a correct current value.

18Mr. Burns explained the concept of using direct sales comparisons for the purpose of establishing the values of properties. He also gave evidence as to how values could be adjusted to bring them in line with values on the valuation day, which for this matter is January 1, 2016. MPAC calculated price changes over time using, in this case, 291 residential property sales in the general vicinity of the Subject Property. They can then adjust sale prices based on the month of a given sale so as to make the sale value equivalent to what the value would have been on January 1, 2016. In this case the Appellant did not challenge this procedure, and the Board will accept the time adjusted prices (“TAP”) as accurate.

19MPAC’s analysis of price changes over time revealed that the trend for residential property prices in the vicinity of the Subject Property is that prices increased a total of 7.99% from January 2015, through December 2016. This result was not challenged by the Appellant and so will be used by the Board in determining values for the purposes of this appeal.

20In this case, MPAC relies on three property sales in the vicinity as comparable sales. All are water-access properties of similar construction to the Subject Property. Some of the important points about these three seasonal recreational properties are recorded in the table below:

TABLE 1: MPAC COMPARATIVE SALES

Property	Time Adjusted Sale Price	Effective Frontage (ft.)	Site Area (ac.)	Building Area (sq. ft.)	Storey	Basement	Quality Code
Subject Property		230	0.97	1,601	2	Yes	6
11218 St. Nora’s	$365,835	140	1.12	1,293	1	No	6
10253 Little Hawk- West	$252,364	200	1.37	1,120	2	No	6.5
14323 Raven South Shore	$363,980	95	0.68	1,067	1.5	No	6.5

21Mr. Burns found all three properties inferior to the Subject Property for different reasons. In the first sale, he found that the structure is smaller. He also found that the location of that property is less desirable. While the lake chain that this property has access to is superior to the Subject Property’s location, Mr. Burns noted that the comparative property is located further north, implying that it would be farther away from the heavily populated areas of Southern Ontario and therefore be somewhat less accessible.

22The second property on Raven Lake, south shore, MPAC said was inferior because it has 135 feet less water frontage. While the structure is newer and a better quality of construction, it is 534 sq. ft. smaller than the Subject Property.

23The third property located on Little Hawk Lake is deemed by MPAC to be an inferior lot but a relatively comparable residence. It is a smaller lot and has 30 feet less water frontage. The lower quality building is 481 sq. ft. smaller than the Subject Property’s residence.

MPAC’s Submissions

24Relying on its evidence, MPAC submits that the correct current value for the 2017 and 2018 taxation years is $401,000.

Appellant’s Evidence

25Frank Loconte represented the Appellant, and gave all of the evidence on her behalf. Mr. Loconte is the spouse of the Appellant.

26Mr. Loconte began by giving a description of the peculiarities of Bob Lake. The Subject Property is one of four lots located on a former peninsula which over time became an island for much of the year. The water levels in Bob Lake are controlled by the Trent Severn waterway and the water levels can vary. At times the access to the cottage is by a private road (Trellis Trail) coming off a municipal road (Tennyson Road). The landowner who owns the access road allows the cottagers to use it; however, they have no legal right of way or easement.

27From approximately the middle of September until winter freeze-up, there is no water access to the Subject Property because of the controls. Access is available using a road which emerges as water levels recede. By spring the water levels are restored and the property is accessible by boat. Mr. Loconte also testified that fluctuating water levels require that the dock serving the property be removed periodically throughout the season – approximately three times a summer. MPAC did not apply a reduction in value for this feature, which Mr. Loconte described as a nuisance.

28The Appellant acquired the property in July, 2015, and immediately attempted to sell it for $399,000. The highest offer received was for $360,000. She signed the offer back for $390,000; it was not accepted. Mr. Loconte produced a copy of the Agreement of Purchase and Sale dated August 4, 2015. Mr. Loconte testified that the effort to sell the Subject Property was suspended in September due to the fact that the water dries up making the cottage at times inaccessible. The listing expired in September, 2015.

29Mr. Loconte also produced a copy of a property appraisal report related to the Subject Property dated May 5, 2016. The appraiser was Wes Lytle of Haliburton Appraisal Services Inc. Mr. Lytle used the direct sales comparison method and chose three comparable sales, the salient details of which are set out below. However, comments accompanying the selection of comparable sales indicate that, “An extensive search of recent MLS data failed to reveal any ideal comparable sales”. Mr. Lytle notes that his Comparable 1, located on Crystal Lake, is located on a “larger and more prestigious lake”, although he also notes that the Subject Property’s structure is much larger than the structures in the three comparable sales. Comparable 1 is noted as being the most similar to the subject. The appraisal concludes that the estimate of value as of May 9, 2016, was $357,000.

30Mr. Lytle makes the following comment on the appraisal in the “Site” section on page 3 regarding access to the Island:

This is an island property with complex access. Deeded summer access is from a nearby landing on shore, total distance landing to subject estimated to be 1 km. After water level drops (see above) a driveable road surface is exposed by the receding waters; this road surface extends from the landing to a neighbors driveway on the island and then crosses the island to the subject dwelling. Services such as fuel oil delivery, septic pumping and anything brought by road is possible from autumn to spring but must cease when the water level rise. Any access across the neighbors property is NOT deeded and exists only by the neighbors sufferance. This represents a legal and title exposure to the client.

TABLE 2: COMPARABLE SALES FROM RESIDENTIAL APPRAISAL

Property	Sale Price	Frontage	Site Area	Building Area	Storeys	Basement	Drive to Subject
Subject		360 ft.	1.05 ac	1,676 sq. ft.	1.5	Yes	Yes/No
801 Island Crystal Lake	$425,000	550 ft.	0.66 ac	930 sq. ft.	1.5	Yes	Yes
10253 Little Hawk (West Shore)	$260,000	202 ft.	1 – 2.99 ac.	980 sq. ft.	1.5	No	No
54699 Big Hawk East Shore	$370,000	320 ft.	1.05 ac	840 sq. ft.	1.0	No	No

Appellant’s Submissions

31Relying on her evidence, the Appellant submits that the correct current value for taxation years 2017 and 2018 is $360,000, based on the fact that this was the highest offer received for the property near the valuation day, and based as well on the appraisal dated May 9, 2016, which suggests a value of $357,000.

ANALYSIS AND FINDINGS

32The Board finds that the comparable sales evidence provided by both parties reinforces the finding that the value for this property had been assessed too high on the valuation day, January 1, 2016. While there are discrepancies between the two reports with respect to the size of the Subject Property, its waterfront, and the number of storeys it has, the evidence of the unusual water conditions in the Subject Property’s lake are confirmed by both MPAC and the independent appraiser. The subject cottage clearly has boat access for part of the year and road access for part of the year, generally during the fall and winter. While this gives the property a utility year round that some water-access properties do not enjoy, it also provides maintenance issues as described by Mr. Loconte in connection with the necessity of moving the dock to accommodate changing water levels.

33While there is no arm’s length sale with which to confirm the value of the property close to the valuation day, the offer to purchase for $360,000 is good evidence of a potential arms’ length sale in August of 2015, only four months away from the valuation day. The prospective purchasers would not accept the higher value of $390,000 when the Appellant signed the offer back at that price. The value of $360,000 is subsequently supported by the independent appraisal made five months after the valuation day for $357,000. These two pieces of evidence support the Appellant’s position.

34The proposed comparable sales produced by MPAC are deemed by MPAC to be inferior properties. None has as large a waterfront; none has as large a residential structure. None of the three proposed sales has a basement like the Subject Property does. However, in the Board’s opinion, a factor which was not given appropriate weight by MPAC in its analysis is the problem of the temporary license for use of the private road when water levels are too low for water access. This is referred to in the appraisal and given some weight by the appraiser. It would be a significant legal consideration in the sale of this property, potentially causing significant access issues to the Subject Property should the ad hoc license be revoked.

35As a result, the Subject Property would be somewhat less valuable than two of MPAC’s three proposed comparable sales – Sales 1 and 3. It would be more valuable than Sale 2 given its larger structure and slightly larger waterfront.

DECISION

36The correct current value of the Subject Property is $360,000 for the 2017 and 2018 taxation years. The Board reduces the assessment from $590,000 to $360,000 for the 2017 taxation year and from $474,000 to $360,000 for the 2018 taxation year.