Campbell v. Municipal Property Assessment Corporation, Region 02, 2019 CanLII 77527

Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: August 12, 2019 FILE NO.: WR 155942

Assessed Person(s): Gerald Campbell, Moira Elizabeth Campbell Appellant(s): Gerald Campbell Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 02 Respondent(s): Township of Tay Valley Property Location(s): 1041 Long Lake Road Municipality(ies): Township of Tay Valley Roll Number(s): 0911-911-020-34500-0000 Appeal Number(s): 3270581, 3288959 and 3345266 Taxation Year(s): 2017, 2018 and 2019 Hearing Event No.: 701167

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

Heard: September 14, 2018 in Perth, Ontario

APPEARANCES:

Parties	Representative
Gerald Campbell	Self-represented
MPAC	Christina Smith
Township of Tay Valley	No one appeared

DECISION OF THE BOARD DELIVERED BY JOSEPH JEBREEN

OVERVIEW

1Gerald Campbell (the “Appellant”) appeals the assessment of his property located at 1041 Long Lake Road in Perth, Ontario in the Township of Tay Valley (the “Property”) for the 2017 taxation year pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 Act (the “Act”). He has also been deemed to have brought an appeal of the 2018 and 2019 assessments pursuant to clause 40(26)(b) of the Act because the 2017 appeal was not finally disposed of before March 31, 2019.

2MPAC returned assessments of $324,000 for the 2017 and 2018 taxation years and $306,000 for the 2019 taxation year but submits that the correct January 1, 2016 current value of the Property for the 2017, 2018 and 2019 taxation years, based on the direct comparison approach, is $306,000. The Appellant takes the position that the correct current value of the Property for those taxation years is $197,000.

3For the reasons that follow, I find that MPAC has failed to discharge its statutory burden to prove the correctness of the current value of the Property. Following the framework set out in Jay Patry Enterprises Inc. v Municipal Property Assessment Corporation, Region 05, 2019 CanLII 39629 (ON ARB), 2018 CanLII 70338 (ON ARB) WR 152892 (“Patry Enterprises”) on the appropriate steps to take when MPAC has failed to meet its burden, I find that the Appellant has not provided sufficient evidence to prove that a particular current value is more likely than not. I therefore reduce the January 1, 2016 assessment for (i) the 2017 and 2018 taxation years from $324,000 to the last uncontested assessed value of $282,000 and (ii) the 2019 taxation year from $306,000 to the last uncontested assessed value of $282,000.

BACKGROUND OF THE PROPERTY

4The Property contains a single family detached bungalow that was built in 2004, with a total building area of 1,427 square feet. The 1,427 square foot walkout basement is mostly finished and of an average quality. The bungalow has 2 bedrooms and 2 bathrooms. The Property also has an 800 square foot detached garage that was also built in 2004. The Property is serviced by a private well and septic tank.

5A significant feature of the Property is its lot size, totalling 202 acres. The uncontradicted evidence is that, in 2015, a portion of the Property was designated as provincially significant wetlands. Further to a June 13, 2017 letter from the Ministry of Natural Resources and Forestry, a total of 37 acres of the land was designated as provincially significant wetlands. The Appellant also provided a map of the Property showing the wetlands and the surrounding buffer zones. The map supports the Appellant’s evidence that approximately 75% of the land is either designated as provincially significant wetlands or is located in the buffer zones.

6A March 6, 2018 email from the Rideau Valley Conservation Authority confirms the Appellant’s testimony that there are restrictions on that portion of land but the restrictions differ depending on whether the land is provincially significant wetlands or in the buffer zones. The wetlands cannot be altered or developed. In order for the Appellant to alter or develop the land in the buffer zones, which is all land within 120 metres of the wetlands, he must first provide an Environmental Impact Statement outlining how the features and functions of the wetlands will be protected. Any severance of the land also requires an Environmental Impact Statement. The Appellant testified that the cost of an Environmental Impact Statement is between eight and twelve thousand dollars. He further testified that, since the designation of wetlands in 2015, he cannot cut and sell wood off his land as he did before the designation. He is restricted to cutting wood for his own personal use.

7On the issue of provincially significant wetlands, MPAC indicated that it has considered the land on the Property to be 51-75% swamp. MPAC also stated that the Appellant may take advantage of the Conservation Land Tax Incentive Program for the 37 acres of wetlands on the Property. If approved, the Appellant would qualify for a 100% property tax exemption for the portion of the Property that is eligible for the program. I do not find the availability of this tax incentive program to be of assistance in determining the current value of the Property.

8I accept the Appellant’s evidence that 75% of the 202 acres of the Property are either provincially significant wetlands or in the buffer zones. MPAC did not contest this evidence and it is supported by the June 13, 2017 letter from the Ministry of Natural Resources and Forestry and the map of the Property described above.

ISSUE

9The issues to be determined in this appeal are:

I. What is the correct current value of the Property for the 2017, 2018, and 2019 taxation years?

II. Should there be an equitable reduction of the current value of the Property pursuant to s. 44(3)(b) of the Act? If so, what should this reduction be?

LAW AND ANALYSIS

Current Value

10Subsection 40(17) of the Act states that MPAC has the burden of proving “the correctness of the current value of the land.” As this Board found in Patry Enterprises at paragraph 21, the burden is around “current value” and not MPAC’s assessment. That is, MPAC is not required to prove the correctness of its returned assessment. It is required to prove the correctness of “the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length from a willing seller to a willing buyer.”

11Patry Enterprises summarizes the procedure to follow in an appeal where current value is at issue, at paragraph 40:

…first look at MPAC’s evidence on its own and make a determination as to whether it can prove its suggested current value on a balance of probabilities. If MPAC meets its burden, the Board should review all of the evidence before it and determine the current value of the property. However, if MPAC has not met its burden, the taxpayer’s evidence must be analyzed to see if it is capable of proving that a particular current value is more likely than not. If there is insufficient evidence in the record that is capable of proving current value, the Board should fix the assessment at the last uncontested assessed value.

12I will follow that procedure here.

Can MPAC’s evidence prove its suggested current value?

13As stated in Patry Enterprises, at paragraph 23, in order for MPAC to meet its burden, MPAC’s evidence “must show how the current value MPAC is proposing is arrived at and why that value is correct. Without this bare minimum, the Board cannot possibly determine if MPAC’s proposed current value is correct.”

14Christina Smith submitted a Valuation Report to establish an opinion of current value. As with most residential properties, MPAC relies on the direct comparison approach to prove its suggested current value of $306,000 for the Property.

15To satisfy its burden when using the direct comparison approach, MPAC cannot simply present any properties. It must review the market data and select properties that are in fact comparable. In her Valuation Report, Ms. Smith relies on five properties in her current value analysis as summarized in the table below:

Property		Sale 1	Sale 2	Sale 3	Sale 4	Sale 5
Address	1041 Long Lake Road	742 Powers Road	260 Glenn Drive	152 Kenyon Road	688 Herron Mills Road	231 Brunton Side Road
Distance from Property (km)		1.7	5.6	7.6	32.7	37.7
Lot area (Acres)	202	0.5	1.7	1.4	182	162
Date sold		11/28/2013	10/14/2016	03/15/2013	07/12/2016	09/30/2015
Time Adjusted Sale Price ($)		196,123	254,506	291,038	507,281	430,742
Building area (sq. ft.)	1,427	1,284	1,014	1,504	1,997	2,104
Year built	2004	1992	1999	2000	1991	1991
Finished Basement Area (sq. ft.)	1,299	0	0	1,200	0	896
Secondary structure type	Detached garage	n/a	Attached garage	Detached garage	Attached garage	Attached garage

16All of MPAC’s properties are serviced by a private well and septic bed and all of them have a single family detached bungalow. However, for the reasons below, I find that the five properties presented by MPAC are not comparable to the Property for the purpose of using them to calculate a current value using the direct comparison approach.

17On cross-examination, Ms. Smith confirmed that none of the sales presented by MPAC contained any provincially significant wetlands. Although MPAC has indicated that Sale 5 is 51-75% swamp, MPAC did not have that property marked as conservation land and so it does not have the same restrictions on provincially significant wetlands that are present on the Property.

18Sale 1 and Sale 3 are more than 2 years away from the January 1, 2016 valuation day. The sales of these properties are too far removed from the valuation day to be used reliably in a direct comparison approach. For reasons stated elsewhere¹, I am not prepared to accept MPAC’s time adjustment study as presented.

19Further, Sales 1, 2 and 3 have site areas between 0.5 and 1.7 acres as compared to the 202 acres of the Property. Without further evidence on the effect of lot size on the value of a property, I am not prepared to accept Sales 1, 2 and 3 as comparable properties. Such a large difference in lot area is too difficult to compare in a meaningful way.

20Finally, Sales 4 and 5 are located 33 and 38 kilometres respectively from the Property. I note that the distances of 33 and 38 kilometres are direct line measurements from the Property. When considering driving distances, Sales 4 and 5 are between 40 and 50 kilometres away from the Property. Ms. Smith opined that Sales 4 and 5 are superior to the Property partly because of the area they are in. The sale prices of approximately $507,000 and $431,000 are not directly attributable to differences in the lots and residences. Without more evidence, I do not know how significant the market differences are and I am not prepared to accept that the markets of Sales 4 and 5 in the townships of Lanark and Beckwith are the same as the market of the Property.

21I therefore conclude that the five sales presented by MPAC are not comparable and cannot be used meaningfully in a direct comparison approach. None of them have provincially significant wetlands, some are too far removed from the January 1, 2016 valuation day, some have 200 acres less land than the Property and others are located more than 40 kilometres away.

22MPAC cannot tender a number of sales of properties that span a range of values and sale dates and submit that its proposed current value is correct because it falls within that range of values. The properties must be comparable.

23At Appendix A of her Valuation Report, Ms. Smith explained that MPAC’s original assessment of $324,000 was reduced to $306,000 after making adjustments to the Property such as revising square footage, updating features and removing a 12% adjustment. MPAC’s proposed current value of $306,000 was produced by its computer model but it could not give particulars of how the current value was calculated.

24MPAC opined that Sales 1 and 2 are inferior, Sale 3 is similar and Sales 4 and 5 are superior. When I asked how MPAC arrived at its proposed value, it submitted that, based on the five sales presented and the similarity of the Property to Sale 3, a current value of $306,000 appeared to be reasonable. That is not enough. MPAC could not explain the effects, if any, of the absence of provincially significant wetlands or the much smaller lot size on the sale value of Sale 3.

25When I asked Ms. Smith if she looked for sales of larger properties with provincially significant wetlands in the area of the Property, she said she did but that they were not comparable. She testified that either the buildings were older, or on waterfront, or overbuilt or had some other features that did not make them comparable to the Property. In her opinion, the larger properties with provincially significant wetlands did not help capture a range of value for the Property.

26I find this evidence difficult to accept considering the five properties selected by MPAC. As I have found above, the five properties are not comparable and do not provide a basis for determining current value using the direct comparison approach. I do not accept that the differences described in my reasons above for Sales 1 to 5 are acceptable in terms of comparability whereas the differences of larger properties with provincially significant wetlands are not. The sales of larger properties with provincially significant wetlands would have been of great assistance in determining the effects, if any, of lot size and of the wetlands on the current value of the Property.

27In summary, MPAC did not present sales evidence of comparable properties nor did it provide a logical pathway from its sales to the proposed current value of the Property.

28MPAC must be able to prove how the proposed value was arrived at and why it is correct. Both of those elements are missing in this case. The minimum threshold in Patry Enterprises is not met, and so I find that MPAC has not met its burden.

Does the taxpayer’s evidence prove a current value?

29Following the framework in Patry Enterprises, if MPAC has not met its burden, I must analyze the taxpayer’s evidence to see if it is capable of proving that a particular current value is more likely than not.

30The Appellant did not submit any sales evidence of his own in response to MPAC’s evidence. Rather, the Appellant submitted that he relied on the 30 properties in MPAC’s equity report to arrive at his proposed current value of $197,000. The Appellant explained that he removed the top five and bottom five sale values, and then calculated the mid value of the remaining 20 properties to be approximately $263,000. The Appellant reduced that value by 25% to account for the provincially significant wetlands, which resulted in his proposed current value of approximately $197,000.

31This is not an accepted method for determining current value. First, the Appellant could not provide a reasonable justification for removing the top five and bottom five sales. Second, there was insufficient data and no analysis of the 20 properties from the equity report to determine whether there are any reasonably comparable properties. Without further evidence, I am unable to accept that these 20 properties can be used in a direct comparison approach. Third, there was no justification provided for applying a 25% reduction as opposed to any other number. The Appellant admitted that he just chose 25% based on a gut feeling. I must use reliable sales data to determine current value using the direct comparison approach.

32I find that the Appellant has not provided sufficient evidence to prove that any particular current value is more likely than not.

33As indicated in Patry Enterprises, when neither party provides evidence that can support a current value, the Board should return the last uncontested assessed value to the assessment roll. The January 1, 2012 assessment was $282,000. I therefore reduce the January 1, 2016 assessments for the 2017, 2018 and 2019 taxation years to $282,000.

Equity

34In Zarichansky v Municipal Property Assessment Corporation, Region 2, 2018 CanLII 70341 (ON ARB) WR 150192, the Board held:

We find that an equity assessment is not necessary when MPAC has failed to discharge its burden. We have not made a current value determination, but have instead imposed a previous assessed value due to MPAC’s failure to discharge its burden. There is therefore no current value determined in clause 44(3)(a) to compare to the assessments of similar lands in the vicinity in clause 44(3)(b). Other land is assessed at its current value pursuant to subsection 19(1) while this property is not. It is likely that there will be an inequity that results from MPAC failing to discharge its burden, but the inequity is that the property is likely assessed lower than other property in the vicinity. That is not an inequity that clause 44(3)(b) can cure.

35For the same reasons, I similarly find that no equity assessment is required in this case.

CONCLUSION

36MPAC has failed to meet its burden to prove the correctness of the January 1, 2016 current value and there is insufficient evidence before me to determine that current value. I therefore reduce the assessment from $324,000 to the January 1, 2012 assessed value of $282,000 for the 2017 and 2018 taxation years. I similarly reduce the assessment from $306,000 to $282,000 for the 2019 taxation year.

Footnotes

1. 1See Bernier v Municipal Property Assessment Corporation, Region 2, 2018 CanLII 107728 (ON ARB) at paras 47-55; Patrick v Municipal Property Assessment Corporation, Region 02, 2019 CanLII 7194 (ON ARB) at paras 31-37; Patrick v Municipal Property Assessment Corporation, Region 02, 2019 CanLII 7196 (ON ARB) at paras 30-36.