Estate of Peter Dyriw v. Municipal Property Assessment Corporation, 2019 CanLII 91528

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: September 26, 2019

FILE NO.: WR 161392

Assessed Person(s): Estate of Peter Dyriw

Appellant(s): Roman Dyriw

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 14

Respondent(s): Township of King

Property Location(s): 155 Edward Avenue

Municipality(ies): Township of King

Roll Number(s): 1949-000-172-92000-0000

Appeal Number(s): 3269457, 3302501 and 3356233

Taxation Year(s): 2017, 2018 and 2019

Hearing Event No.: 715178

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

Heard: June 27, 2019 by telephone conference call

APPEARANCES:

Parties	Representative
Estate of Peter Dyriw and Roman Dyriw	Roman Dyriw
MPAC	Albert Ng
Township of King	Alice Liu and Karen Wootton

DECISION OF THE BOARD DELIVERED BY DAN WEAGANT

INTRODUCTION

1The subject property, located at 155 Edward Avenue (“subject property”), has an assessment of $550,000. The property comprises a 10-acre farm with outbuildings and a 2,600 square-foot residential dwelling. Roman Dyriw (the “Appellant”) believed these assessments were too high and filed an appeal for the 2017 taxation year. The 2017 appeal was deemed for the 2018 and 2019 taxation years. The Appellant believes an equitable assessment should be lower than what was returned.

2In preparation for the hearing, MPAC made a reduction in the assessment, from $550,000 to $547,000 and recommended that value as a reduced assessment.

3The Board must decide two things in these appeals. Firstly, the Board must determine the current value of the subject property. Once that decision is made, the Board must then determine if the current value found needs to be reduced to reflect equitable assessment.

DECISION

4The Board finds the current value of the subject property is $559,000. The Board also finds that there is no evidence to support a reduction in this amount to make it equitable with the assessments of similar lands in the vicinity.

5As neither MPAC nor the Township of King (“Township”) sought a higher assessment under Rule 40 of the Board’s Rules of Practice and Procedure (“Rules”), the assessment of 155 Edward Avenue is confirmed for the 2017, 2018 and 2019 taxation years at $550,000, apportioned as follows:

• In the Residential property class: $246,100

• In the Farm property class: $303,900

LEGISLATION

6In making its determination of these appeals, the Board must consider the relevant sections of the Assessment Act, R.S.O. 1990, c. A. 31 (the “Act”).

7Section 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.

8Section 19.(1) of the Act states:

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

9Section 19.(5) of the Act states:

19.(5) Farm Lands and Buildings – For the purposes of determining the current value of farm lands used only for farm purposes by the owner or used only for farm purposes by a tenant of the owner and buildings thereon used solely for farm purposes, including the residence of the owner or tenant and of the owner’s or tenant’s employees and their families on the farm lands,

(a) consideration shall be given to the current value of the lands and buildings for farm purposes only;

(b) consideration shall not be given to sales of lands and buildings to persons whose principal occupation is other than farming; and

(c) the Minister may, by regulation, define “farm lands” and “farm purposes

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.

What is the Current Value of the Subject Property?

MPAC’s Case

11MPAC applied the Direct Comparison Approach to value and submitted a valuation report that considered the sales of five properties in the Township. These five properties sold between January 2012 and January 2015 for prices ranging from $80,000 to $640,250.

12To determine the current value of the subject property from these six comparable sales, MPAC adjusted their respective sale prices to account for prices changes over time. These Time Adjusted Sale (“TAS”) prices were presented as follows:

• Sale 1 (27.5 acres) - $802,029

• Sale 2 (5 acres) - $131,657

• Sale 3 (5 acres) - $115,771

• Sale 4 (10 acres) - $442,985

• Sale 5 (10 acres) - $722,275

13MPAC considered the Sale 1 property to be superior to the subject property owing to its 27.5 acres, whereas the subject property has 10 acres. The Sale 2 and Sale 3 properties were considered by MPAC to be inferior to the subject property because they comprised 5 acres each, whereas the subject property comprises 10 acres. MPAC considered the Sale 4 property to be inferior to the subject property owing to the size of its residential dwelling. The Sale 5 property was considered by MPAC to be similar to the subject property owing to its residential dwelling and its lot size.

14By making these comparisons, MPAC determined the range of value for the subject property to be between the highest TAS valued, inferior property (Sale 4) and Sale 5, the next highest TAS value in the sample, which it considered to be relatively comparable to the subject property. MPAC submitted that by making the comparison with these two properties, the subject property should be in the lower part of this range. The result was a value of $547,000, which MPAC considered to be reasonable.

Appellant’s Case

15The Appellant did not disclose any documentary evidence or oral testimony related to current value. He relied entirely on submissions related to equitable assessment. Those arguments are addressed below.

Board’S Analysis

What is the Current Value of the Subject Property?

16The best evidence of current value is a sale of the subject property that occurred on or near the applicable valuation day. In the absence of such a sale, the next best approach to determining current value is the comparison of the subject property to other properties that have sold in proximity to the valuation day. Because the subject property is farmland used for farm purposes, only sales of other farm properties used for farm purposes are considered in accordance with s 19.(5)(a) and s 19.(5)(b) of the Act.

17In this case, the Board has the five sales of farm lands used for farm purposes advanced by MPAC to consider. The Board disregards MPAC’s proposed Sales 1, 2 and 3 as these sales include sales of lands of 25 acres, 5 acres and 5 acres respectively, whereas the subject property has 10 acres. The Board disregards MPAC’s proposed Sale 5 as this sale took place in 2014, some 24 months before the valuation day and January 1, 2016.

18The Board finds the best evidence of the current value of the subject property is MPAC’s Sale 4 property on Aileen Avenue. This property is 10 acres in size and has a residential dwelling. It sold in 2015 and was assigned a time adjusted sale price of $442,985. In its comparison, MPAC considered the Sale 4 property to be inferior to the subject property, chiefly owing to the differences between the two residences. The Sale 4 property has a residence of 1,008 square feet, whereas the subject property has a two-storey dwelling comprising approximately 2,600 square feet.

19In order to compare the differences between the subject dwelling and the Sale 4 dwelling, the Board must extract the apportioned Residential value of the subject property and the Sale 4 property. The subject property’s value, as returned by MPAC is apportioned with $242,700 attributed to the Residential property class.

20The assessment of MPAC’s the Sale 4 property attributed 28.6% of the total value to Residential. When this percentage is applied to its TAS value of $442,985 the result is $126,694 or $126,700 rounded; leaving $316,285 of its TAS value in the Farm property class. The subject dwelling is over two times the size of the dwelling at Comparable Sale 4. This is strong evidence that the assessment of the residential component of the subject property of $242,700 is reasonable in comparison.

21To determine the current value of the subject farm land, the same value attributed to the Sale 4 property can be applied as the property sizes are identical, and the two farms are less than 800 metres apart. This results in a current value, for the farmland of $316,285 plus the assessed value of the subject dwelling for a total of $558,985 or $559,000, rounded.

Is a Reduction in the Current Value necessary to achieve Equitable Assessment when Reference is made to the Assessments of Similar Properties in the vicinity?

22The Appellant did not make a specific submission on the question of equity of assessment. However, he did submit to the Board that all properties in the Holland Marsh area had risen exponentially during the time before and after the January 1, 2016 valuation day applicable to these appeals. He submitted further that the increasing values of sales were attributable to speculative purchasors who were looking for places to purchase land that had a good chance of increasing in value. He submitted finally that this general market increase results in property sales that should not be used to determine assessments because they included variables that are not related to the productivity of farm lands, which is the most important aspect of farmland value.

23MPAC submitted an equity analysis that compared the TAS values of 32 farm properties used for farm purposes in the vicinity of the subject property with their corresponding 2016 current value assessments. Comparisons of such assessments and TAS values are a common means of determining if similar properties in the vicinity are equitable assessed. The comparison of these assessments to time adjusted sale values is called the Assessment to Sale Ratio (“ASR”). The range of ASRs in MPAC’s sample was 0.558 to 1.483, with a median of 0.979.

24According to MPAC, no adjustment to the current value determined is required because the median ASR falls within a range of 0.95 and 1.05. This range is considered by MPAC and the International Association of Assessing Officers (“IAAO”) to indicate that similar properties in the vicinity are being assessed at or very near their current values, based on sales.

Board’s Analysis

25The concept of reducing the current value determined to make the subject property’s assessment equitable with that of similar properties in the vicinity requires the Board to change a correct assessment finding to one that is incorrect to make it fair and equitable. Adjustments for this purpose cannot therefore be made without compelling evidence to do so.

26The Appellant sought to support his position of inequity by sharing an anecdotal narrative of the increasing values of farm land in the Holland Marsh area, whereby he asserted non-farm market pressures were elevating farm values to an unfair level, when sale prices are used to determine the equity of assessment.

27MPAC’s equity analysis indicated that, when the assessments of 32 similar farm properties in the vicinity are compared with their TAS values, the result shows these properties are generally assessed at 97.9% of their current values.

28In making its determination of any equity reduction, the Board must be convinced by the best evidence available that the reduction is warranted. The Board finds that the MPAC’s median ASR, using the 32 properties in its analysis evidence is the best evidence of whether or not a reduction in current value is required for the purposes of equitable assessment. The median ASR method is superior to the Appellant’s submission, because it is based on a statistical analysis of sale price, price change over time, vicinity and a comparison to assessment. These are all components of the statutory requirement under s. 44(3) of the Act that requires the Board to make a finding on the question of equity of assessment.

29The Board finds there is no evidence to support a reduction in the current value determined for that assessment to be considered equitable when it is compared to the assessments of similar properties in the vicinity.

CONCLUSION

30The Board finds the current value of the subject property is $559,000. The Board also finds that there is no evidence to support a reduction in this amount to make it equitable with the assessments of similar lands in the vicinity.

31As neither MPAC nor the Township sought a higher assessment under Rule 40 of the Board’s Rules, the assessment of 155 Edward Avenue is confirmed for the 2017, 2018 and 2019 taxation years at $550,000, apportioned as follows:

• In the Residential property class: $246,100

• In the Farm property class: $303,900