Pilon v. Municipal Property Assessment Corporation, 2019 CanLII 86384

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: September 13, 2019

FILE NO.: WR 160495

Assessed Person(s): Karin Pilon

Appellant(s): Karin Pilon

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

Respondent(s): Township of the North Shore

Property Location(s): Striker CON 1 PT 1 LOT 1 CK217 PCL 5730 AES

Municipality(ies): Township of the North Shore

Roll Number(s): 5740-010-001-12600-0000

Appeal Number(s): 3260571, 3314782 and 3368038

Taxation Year(s): 2017, 2018 and 2019

Hearing Event No.: 713578

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

Heard: May 9, 2019 by telephone conference call

APPEARANCES:

Parties

Representative

Karin Pilon

Self-represented

MPAC

Richard Thomas

Township of the North Shore

No one appeared

DECISION OF THE BOARD DELIVERED BY JOSEPH JEBREEN

OVERVIEW

1Karin Pilon (the “Appellant”) appeals the assessment of her property with a legal description of Striker CON 1 PT 1 LOT 1 CK217 PCL 5730 AES in the Township of the North Shore (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”). The Appellant 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 $40,500 for the 2017 taxation year, $36,500 for the 2018 taxation year and $38,500 for the 2019 taxation year but submits that the correct January 1, 2016 current value of the Property for the 2017 and 2018 taxation years, based on the direct comparison approach, is $36,500. MPAC maintains that $38,500 is the correct January 1, 2016 current value for the 2019 taxation year. The Appellant takes the position that the correct current value of the Property for those taxation years is, at its highest, $25,000.

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 assessments for the 2017, 2018 and 2019 taxation years to the last uncontested assessed value of $19,800.

BACKGROUND

4The Property is a piece of vacant land with a structure on it. The land has a frontage of 204 feet and a depth of 245 feet for a total area of 1.2 acres. The Property is not connected to water, hydro or septic.

5The structure is made up of one main area measuring approximately 940 square feet plus three others sheds leaning up against the main structure and measuring 210 square feet, 252 square feet and 212 square feet respectively (together, the “Structure”). The Structure is not habitable and the pictures show that it is old and in need of repair. The Appellant testified that it is mostly used for storage but that her husband has tried to use the space as a workshop from time to time. Parts of the Structure have no floor and a part is used as wood storage.

6There is no access to a public road or any access over a private road registered on title to the Property. The Appellant accesses the Property by a private road over a neighbour’s property. This is a marked difference between the Property and other properties that have access by a public road or even by a legal right over a private road.

7MPAC originally assessed the Property at $40,500 and then reduced the assessment to $36,500 on account of a 10% reduction for the access issue described above. MPAC’s most recent assessment of $38,500 is to account for the extra area provided by two of the sheds that were previously unknown to MPAC. The sheds are not new; rather, due to an inspection, MPAC recently discovered that the area of the sheds is larger than it previously had recorded.

ISSUE

8The 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

9Subsection 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.”

10Patry 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.

11I will follow that procedure here.

Can MPAC’s evidence prove its suggested current value?

12As 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.”

13Richard Thomas submitted MPAC’s 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 values for the Property.

14To 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 his Valuation Report, Mr. Thomas relies on three properties in his current value analysis, which I refer to as Sale 1, Sale 2 and Sale 3.

15Sale 1 is located at 25 Lake Drive in the Township of the North Shore and sold for $17,000 in September 2014. It has a frontage of 114 feet and a depth of 680 feet for a total of 1.78 acres. Sale 1 has no structures on it but it has year round access to a publicly maintained road and it is part of the Forest Glen subdivision outside Blind River. It is connected to municipal water. As there is no structure built on Sale 1, it is not yet connected to the municipal sewer or the hydro poles.

16Sale 2 is located at 1 Beech Drive in the Township of the North Shore and sold for $18,000 in August 2015. It has a frontage of 158 feet and a depth of 219 feet for a total of 0.79 acres. Sale 2 has no structures on it but it has year round access to a publicly maintained road and it is part of the Forest Glen subdivision outside Blind River. It is connected to municipal water. As there is no structure built on Sale 2, it is not yet connected to a septic system or the hydro poles.

17Sale 3 is located at 1 Woodlawn Drive in the Township of the North Shore and sold for $20,000 in April 2013. It has a frontage of 207 feet and a depth of 290 feet for a total of 1.98 acres. Sale 3 has no structures on it but it has year round access to a publicly maintained road and it is part of the Forest Glen subdivision outside Blind river. It is not connected to municipal water. As there is no structure built on Sale 3, it is not yet connected to the municipal sewer or the hydro poles.

18I asked Mr. Thomas how he arrived at values of $36,500, $40,500 and $38,500 for the 2017, 2018 and 2019 taxation years respectively using these three sales and the direct comparison approach. Mr. Thomas testified that all three properties are inferior to the Property because the Property has the Structure and that it is reasonable to increase the sale prices of the comparable properties by approximately $20,000 to account for the Structure. Mr. Thomas testified that he obtained the value of $20,000 from MPAC’s computer model but there was no evidence to support how this value was arrived at. This is not a proper application of the direct comparison approach.

19In his Valuation Report, Mr. Thomas states:

Selecting sold properties inferior, superior and similar to the subject property also allows me to establish a probable range of current value for the subject property by bracketing the subject between sold properties that are inferior and superior to it.

20For reasons discussed further below, I do not accept MPAC’s three comparable sales provide any meaningful comparison that can be used to determine the current value of the Property using the direct comparison approach. However, putting that issue aside for the moment, MPAC did not follow its own procedure because it failed to apply the bracketing method. MPAC opined that Sale 1, Sale 2 and Sale 3 were all inferior to the Property. Even based on MPAC’s own evidence, Mr. Thomas could not apply bracketing because all of the comparable sales are inferior. There is no upper limit to allow Mr. Thomas to establish a probable range of current value.

21I have another concern with MPAC’s evidence. Mr. Thomas could not provide a pathway from the sales presented to the proposed current values using the direct comparison approach. Instead, Mr. Thomas relied on MPAC’s computer model to add $20,000 to the values of the comparable properties but provided no other supporting evidence.

22MPAC is asking the Board to accept that its computer model is accurately valuing components such as the Structure without supporting evidence. However, MPAC regularly asserts that its computer model is not under appeal. It cannot then expect the Board to simply accept values generated by that computer model and not supported by any other evidence. MPAC should use accepted principles of valuation to establish a correct current value. It has not done so here.

23Further, although all of MPAC’s properties are vacant lots within 6 kilometres of the Property, no meaningful conclusions can be drawn from the comparable sales in evidence. The comparable sales are not useful in determining a value using the direct comparison approach. MPAC opines that the comparable properties are strong sales for the vacant land portion of the Property and that some value has to be added for the Structure. The evidence does not support these conclusions.

24First, the evidence does not support a finding that the Structure has value. The Structure is old, in need of repair and does not have flooring in places. The pictures show a lot of junk being stored at the Property. It is not clear to me that this Structure has any value but, even if it does, there is no evidence to support MPAC’s estimate of $20,000. It is certainly possible that a purchaser of the Property would perceive the Structure as detracting from the value of the land and bear the cost of tearing it down.

25Second, the three sales presented are not strong evidence of the current value of the land portion of the Property. Sale 3 is more than 2 years away from the January 1, 2016 valuation day. This sale is 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.

26Mr. Thomas confirmed that none of the sales presented by MPAC had the same access issues as the Property. Sales 1, 2 and 3 all have year round access to a publicly maintained road. This is significantly different than the access to the Property which requires crossing over the neighbouring land. There is no deeded access to the Property. Further, although the Property may be accessed in the winter, the Appellant only does so rarely and she pays for the ploughing of the access road. There is no evidence to assist in determining the exact effect of this access issue on the current value of the Property. However, the Appellant testified that she unsuccessfully attempted to buy access from two different neighbours. Whatever the reason for the failed attempt to negotiate deeded access, this evidence supports a finding that access to the Property by the private road is a hurdle that owners of property with access to a public road need not worry about.

27Other differences between Sales 1 and 2 and the Property are that (i) Sale 1 and Sale 2 are connected to municipal water whereas the Property is not, (ii) Sales 1 and 2 have hydro poles ready to be connected to the grid whereas the Property does not have a hydro pole to connect to, and (iii) Sales 1 and 2 are in a subdivision whereas the Property is not. The Appellant testified that she tried to have hydro install a pole near the Property but that her hydro company would not do so. She also stated she would require her neighbour’s permission before being able to install a septic tank.

28The Property is simply too different than the comparable sales to make any meaningful comparisons. The Property is landlocked as there is no legal right of access, there is no hydro pole to connect to, no water and is located in a rural area away from any subdivision. The effect, if any, of the Structure on value is unknown.

29MPAC’s sales are not comparable to the Property. There are simply too many differences and insufficient evidence to account for those differences in a meaningful way.

30MPAC 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?

31Following 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.

32The Appellant did not submit any sales evidence of her own in response to MPAC’s evidence. Rather, the Appellant submits that she does not understand MPAC’s valuation because they are comparing vacant properties that are much more desirable than her Property. She also questions how a value of $20,000 was arrived at for the shed-like structure. She states that MPAC has failed to consider the effects of the limitations associated with her Property on value including that it is landlocked, has no water, no hydro, and no septic.

33The Appellant suggested that, at most, the value of her Property could have increased by $5,000 over the last assessment of $19,800 for a total proposed value of approximately $25,000. The Appellant admitted that the increase of $5,000 was just based on her own discussions with her husband. There were no sales used to arrive at that figure and so I cannot accept it.

34I find that the Appellant has not provided sufficient evidence to prove that any particular current value is more likely than not.

35As 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 $19,800. I therefore reduce the January 1, 2016 assessments for the 2017, 2018 and 2019 taxation years to $19,800.

Equity

36In 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.

37For the same reasons, I similarly find that no equity assessment is required in this case.

CONCLUSION

38MPAC 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 January 1, 2016 assessments to the January 1, 2012 assessed value of $19,800 for the 2017, 2018 and 2019 taxation years.

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.