Nelson Stewart Taddeo v. Municipal Property Assessment Corporation (“MPAC”) Region No. 32, 2019 CanLII 94113

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

October 03, 2019

FILE NO.:

WR 161794

Assessed Person(s):

Nelson Stewart Taddeo

Appellant(s):

Nelson Stewart Taddeo

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region No. 32

Respondent(s):

Township of Ignace

Property Location(s):

511 Main Street

Municipality(ies):

Township of Ignace

Roll Number(s):

6001-000-001-41900-0000

Appeal Number(s):

3260255, 3315013 and 3368288

Taxation Year(s):

2017, 2018 and 2019

Hearing Event No.:

718669

Legislative Authority:

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

Heard:

July 16, 2019 by telephone conference call

APPEARANCES:

Parties

Representative

Nelson Stewart Taddeo

Self-represented

MPAC

Shelby Roper, Carlene Steiner and Justin Johnstone (observing)

Township of Ignace

No one appeared

DECISION OF THE BOARD DELIVERED BY SUBUOLA AWOLERI

INTRODUCTION

1Nelson Taddeo, (the “Appellant”) is the owner of 511 Main Street (the “Subject Property”). The Subject Property is a vacant commercial land with an effective frontage of 100 feet and an effective depth of 180.55 feet for a total effective site area of 0.41 acres. This property is part of five properties owned by the Appellant, in which he has appealed their assessment.

2Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act“), the assessment of 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”).

3The Appellant appeals the 2017, 2018 and 2019 assessment of the Subject Property on the grounds that the assessment is too high. The Appellant submits that the current value of the Subject Property should be $1,000. The Subject Property was assessed by MPAC at $8,700 for the January 1, 2016 valuation date. Shelby Roper, MPAC’s advocate, requests that the Board confirms the assessment of the Subject Property as returned.

4Pursuant to s. 40(11) of the Act, the Municipality, (in this case, the Township of Ignace) is a party to this proceeding. However, the Township did not advise the Board of its position in this appeal and no one appeared at the hearing on the Township’s behalf.

5At the completion of the hearing, the Board reserved its decision.

ISSUE

6The issues to be determined are:

i) What is the correct current value of the Subject Property for the 2017, 2018 and 2019 taxation years?

ii) Is the current value as determined by the Board equitable in reference to the assessments of similar lands in the vicinity?

DECISION

7The Board determines the correct current value of the Subject Property for the 2017, 2018 and 2019 taxation years to be $4,655.

8The Board finds that this assessment at current value is equitable with the assessments of similar lands in the vicinity, and therefore no further reduction is required to achieve equity.

9The Board reduces the assessment of the Subject Property from $8,700 to $4,655 for the 2017, 2018 and 2019 taxation years.

REASONS FOR DECISION

Legislation

10In accordance with s. 44.(3)(a) of the Act, the first mandate of the Board is to determine “the current value of the land.” Section 1 of the Act defines current value as “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.” That is, for the 2017, 2018 and 2019 taxation years, the Board must determine what the Subject Property would have sold for in an arm’s length transaction on the January 1, 2016 valuation day set by the Act.

11The second mandate of the Board is provided in s. 44.(3)(b) of the Act which provides:

… The Board shall … 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.

12Section 19.2(1)4 of the Act prescribes the valuation days, which provides:

Valuation days

19.2(1) Subject to subsection (5), the day as of which land is valued for a taxation year is …: For the period consisting of the four taxation years from 2017 to 2020, land is valued as of January 1, 2016.

13Section 40.(17) of the Act places “the burden of proof as to the correctness of current value” on MPAC.

Issue No. 1: What is the correct current value of the Subject Property for the taxation years 2017, 2018 and 2019

Current Value – Evidence and Analysis

MPAC’s Evidence and Submissions

14Carlene Steiner, MPAC’s witness prepared a valuation report respecting the Subject Property, dated June 20, 2019, which she submitted into evidence.

15Ms. Steiner testified that she has been a property valuation specialist, employed by MPAC for over 25 years and one of the municipalities which she is responsible for is the Kenora district of Northwestern Ontario, where the Subject Property is located.

16Ms. Steiner testified that she inspected the property on March 14, 2017. During the inspection, she testified that the Appellant took her to the rear of the Subject Property to see the topography of the Subject Property and he argued that the declining slope at the rear has an impact on the assessment of the Subject Property. Ms. Steiner testified that there is approximately 45 feet of gradual sloping of the land at the rear of the Subject Property and the highest point is about four to six feet, which affected approximately a quarter of the back part of the lot. Ms. Steiner argued that this part of the back portion can still be utilized and it does not affect the value of the Subject Property. She added that the 2012 current value assessment (“CVA”) of the Subject Property was $9,300 and the Appellant did not appeal the 2012 assessment.

17Ms. Steiner added that the market for non-residential properties in Northwestern Ontario is flat and no time adjustment was applied to sales from 2012 to 2016 base year. Furthermore, she added that she applied time adjustments to sales used prior to 2012 in order to bring those sales to the 2016 current market value. She further testified that the sales prior to 2012 were used in order to bring forward historical markets as there have not been any significant changes to the market over the past five years prior to the 2016 valuation date.

18Ms. Steiner presented the Board with five property sales, which she testified are within the Subject Property’s vicinity, and that by establishing which of these sales are superior, inferior or similar to the Subject Property, she was able to establish a range of value for the Subject Property. The details of the five property sales are summarized in Table 1 below:

Table 1

	Address	Assessment ($)	Sale Date & Sale Amt. ($)	Time / Adjusted Sale ($)	Effective Frontage (sq. ft.)	Effective Depth (sq. ft.)	Effective Site Area (Acres)	Distance from Subject property (KM)
Subject Property	507 Main Street	8,700	N/A	N/A	100	180.55	0.41	N/A
Sale 1	Highway 17	26,500	July 2012 (24,000)	unknown	746.8	unknown	19.76	0.372
Sale 2	114-116 Main Street	8,000	June 2010 (20,000)	23,083	100	150	0.34	0.5325
Sale 3	209-211 Main Street	13,500	June 2016 (15,000)	unknown	100	107	0.25	0.4354
Sale 4	709 Main Street	12,000	January 2011 (7,300)	8,868	347.19	189.45	1.51	unknown
Sale 5	1 Highway 17 West	10,000	December 2014 (4,000)	unknown	421.16	56.89	0.55	1.8288

19In deriving the CVA for these five properties including the Subject Property, Ms. Steiner testified that MPAC considered the economies of scale in accordance to the lot sizes and the market and neighbourhood adjustments were applied. According to Ms. Steiner, all the properties including the Subject Property received a neighbourhood downward adjustment of -49% and the developed vacant lands such as Sales 1 and 3 properties received a 100% upward adjustment. She added that the Subject Property and Sales 4 and 5 properties did not qualify for this upward adjustment since they are undeveloped.

20Ms. Steiner argued that the Sale 1 property is considered superior to the Subject Property due to its size, it is developed, and it has a driveway access to Highway 17. She also added that this Sale is in close proximity to the Subject Property. According to Ms. Steiner, the Sale 2 property is similar to the Subject Property, with the exception that it has a driveway. Ms. Steiner testified that in an interview with the purchaser of the Sale 2 property, the purchaser indicated that this property was purchased as a tax sale. Ms. Steiner stated that although MPAC normally does not use tax sales, the purchaser stated that they offered what they considered a fair market price as they were long term residents of the community and felt obliged to pay a fair price. She also testified that this property is partially paved and that the 100% upward adjustment was erroneously omitted for this sale to recognise that it is developed land. Ms. Steiner also considers the Sale 3 property as being similar to the Subject Property with the exception of a driveway into the property. She testified that the sellers were interviewed, and they stated that they felt they sold below the market value since they had a personal relationship with the buyer and wanted to assist the buyer. She also indicated that the 100% upward adjustment was applied to this property to recognise it as developed land. Ms. Steiner also considers the Sale 4 property “somewhat” similar to the Subject Property as it has no access from Highway 17. Ms. Steiner testified that the Sale 5 property is inferior to the Subject Property due to its location away from the main commercial/retail area of the Township and it is in close proximity to the railway. She added that its effective depth of only 56.89 square feet (“sq. ft.”) further makes development on this land a challenge and it is currently being used as a turn off to Highway 17.

21Ms. Steiner further testified that the Subject Property has access to Highway 17 and that access for the Subject Property means that the Subject Property has the ability to have a public or private roadway without any legal restriction to access it.

22Ms. Steiner submitted that the most similar Sales 2 and 3 properties have established the market value range for developed vacant commercial lands from $15,000 to $20,000. She added that the market value for the undeveloped vacant commercial land cannot be established by this range of values considering the development challenge with its effective depth. Ms. Steiner testified that by analysing the market value of the most similar sales, the CVA of the Subject Property is within an acceptable range of $8,700. She added that the Sale 5 property sold for $4,000 and this is the lower end for an undeveloped land, which has development challenges. She further testified that comparing the Subject Property’s larger lot size to the smaller lot sizes of Sales 2 and 3 properties, which sold for $20,000 and $15,000 respectively, MPAC’s assessment of the Subject Property at $8,700, is reasonable and correct. Ms. Steiner further argued that the back portion of the Subject Property can still be utilized and does not affect its assessment and that the current value of the Subject Property at $8,700 should be confirmed.

23Ms. Steiner concluded that the current value of the Subject Property at $8,700 is correct; given the market analysis of the sale comparables as detailed in Table 1 above, knowledge of the area and the inspection of the Subject Property.

Appellant’s Submissions

24The Appellant did not serve and file any evidence. He used MPAC’s valuation report to make his submissions to the Board.

25The Appellant argued that at the time of Ms. Steiner’s inspection of the Subject Property, there was snow on the land and it would have been awkward for her to gauge the topography of the Subject Property. Ms. Steiner insisted that she was still able to see that there was a decline in the back portion of the land, which does not affect the value of the Subject Property.

26The Appellant also argued that MPAC’s valuation report is inaccurate. He submitted that there is a 12-feet deep ditch in front of the Subject Property, which could limit access to Highway 17. Ms. Steiner testified that she did not recall that there was a ditch in front of the Subject Property. The Appellant argued that there is a transition from a four-lane highway to a two-lane highway approaching the front of the Subject Property. He further questioned Ms. Steiner on how this transition impacts the assessment of properties. Ms. Steiner testified that she could not speak to this since she is not an employee of the Ministry of Transportation Ontario (“MTO”). The Appellant further submitted that the Board is unable to have accurate information about the Subject Property since MPAC did not provide any photographs of the front and rear of the Subject Property.

27The Appellant also argued that all of MPAC’s sales are superior to the Subject Property but have lower assessments than the Subject Property. He argued that the Sale 1 property was a tax sale which Ms. Steiner disagreed with and testified that it was an open market sale. The Appellant used the photograph of the Sale 1 property, in MPAC’s valuation report to argue that there is also a ditch in front of this property which was all covered in snow. Ms. Steiner admitted that there could be a ditch in front of this property and that it is not unusual to have a ditch along the roadway. The Appellant argued that having a ditch in front of the Subject Property mitigates the Subject Property’s value. The Appellant further argued that Sales 2 and 3 properties are not similar to the Subject Property. That the purchaser of the Sale 2 property has no obligation to MPAC to provide accurate information about the Sale and he insisted that this was a tax sale. He further submitted that the Sale 2 property is partially paved and it has access to Highway 17, which are features that the Subject Property does not possess. The Appellant argued that the Sale 3 property still has some of the concrete from the store that was formally on it and it is a developed land. The Appellant further argued that the Sale 4 property was also a tax sale; Ms. Steiner disagreed with the Appellant. The Appellant further testified that the Sale 5 property is polluted land. Ms. Steiner testified that she is not aware of this.

28The Appellant testified that there are no chances that MPAC’s current value for the Subject Property is correct, since the Township is practically giving away its land for a purchase price of $1,000. Consequently, he submitted that the correct current value of the Subject Property should be $1,000.

29In conclusion, the Appellant submitted that Ms. Steiner is incorrect about the date of the inspection of the Subject Property and with the snow on the ground as revealed in MPAC’s photographs; this prevents the honest condition report about the Subject Property. He also submitted that the presence of a ditch in front of the Subject Property, its lack of access to Highway 17 and the decline at the rear portion, interferes with the marketability of the Subject Property and ultimately affects its value.

MPAC’s Submissions

30Ms. Roper submitted that the Appellant’s submissions to the Board are opinion based that the Appellant has not provided evidence to quantify the downward adjustments to the Subject Property and his reference to potential future costs on developing the Subject Property are all hypothesis. In support of her argument she referred the Board to its prior decision in Garden Trail Development Ltd. v. Municipal Property Assessment Corp. Region 15, [2015] O.A.R.B.D. No. 282 (“Garden Trail”) at paragraph 37, where the Board determined:

In regard to the Appellant having to bear extraordinary costs in developing the land the Board finds this argument to be self-serving. It is expected that when a land developer is considering purchasing development lands that they will perform their due diligence and take into account all aspects of the potential purchase, including in assessing whether the land in question would be a good investment. Also included in this due diligence would be considering land preparation costs. This reduction, if granted, would eventually be borne by the tax payer to the benefit of the Appellant, and the Board finds this unacceptable. The Board doubts that any developer is going to purchase and prepare land to be sold at a loss. Therefore, the Board puts no weight on this argument.

Findings on Issue 1

Board’s Analysis – Correct Current Value

31Under 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 arm’s length and market-tested sale of the property on the valuation date or close to it. If, as in this case, no such transaction took place, the next best measure of current value is arm’s length and market-tested sales of comparable properties located nearby, as close as possible to the legislated valuation date of January 1, 2016.

32Apart from his testimony, the Appellant did not provide any evidence neither did he present any comparable market sales. He submitted that the Township is selling its properties for a minimal amount of $1,000 and if the Township is diluting the market, it will be difficult to sell the Subject Property and that the correct current value for the Subject Property is $1,000. The Township was not represented at the hearing to provide evidence of these sales (if any), neither did the Appellant provide any corroborating evidence of sales of these properties. During cross-examination, Ms. Steiner testified that she was not aware of these sales by the Township. This was of limited assistance to the Board in determining the correct current value of the Subject Property. The Board puts no weight on this evidence.

33The Appellant further submitted that the Subject Property qualifies for downward adjustments to its CVA of $8,700 due to its declining condition at the rear, its lack of access to Highway 17 and the ditch in front of it. Ms. Steiner testified that the Subject Property could have potential access to Highway 17 with a driveway. She did not testify that it already has access to the Highway. The Board notes that this marks a difference between the Subject Property and MPAC’s comparables with access to Highway 17. Ms. Steiner also testified that the declining portion at the back of the Subject Property does not have an impact on its value. The Appellant insists that it affects the marketability of the Subject Property but has not provided any evidence in this regard. The Appellant did not provide any evidence to quantify these downward adjustments. Evidence is required to quantify or measure the impact of any unique situation against the assessed value of the Subject Property. The Board cannot speculate or arbitrarily calculate an impact to the Appellant’s assessed current value. Accordingly, the Board cannot make any downward adjustment to the determined current value of the Subject Property without quantitative evidence.

34The Board considered MPAC’s five property sales to determine the correct current value range of the Subject Property. Ms. Steiner argued that the range of sales value for similar developed vacant commercial land is $15,000 to $20,000 and the market value for the undeveloped vacant commercial land cannot be established by this range of value considering the development challenge with its effective depth. Conversely, she argues that upon analyzing the market sales of the most similar properties, which according to MPAC is Sales 2 and 3 properties, the CVA of the Subject Property is within an acceptable range of $8,700. If MPAC deems Sales 2 and 3 properties as being similar to the Subject Property, being developed lots, the CVA of the Subject Property as determined by MPAC does not fall within an acceptable range of these similar properties, since it is undeveloped.

35The shoulder years for the valuation date is 12 months before and after the valuation date of January 1, 2016. The Board can also go as far back as 18 months on either side of the valuation date. The caution being that the further a sale is from the valuation date, the less likely it reflects the market value on the valuation date. Ms. Steiner testified that no time adjustments was applied to sales from 2012 to 2016 base year since the market was flat, but she applied time adjustments to sales used prior to 2012 in order to bring it to 2016 current value. The sale dates for MPAC’s five property sales range from 2010 to 2016. Ms. Steiner provided time adjusted sale prices for Sales 2 and 4 properties; however, there was no evidence on how MPAC arrived at these time adjusted sale amounts, no evidence on what sales were used to obtain the time adjusted sales considering that Ms. Steiner testified that the market in Township of Ignace is flat. There were no time adjustment factors provided in MPAC’s valuation Report, and the Board is unable to understand how the time adjusted sale amounts were derived by MPAC. Consequently, although the Board will prefer time adjusted sale amounts for the five sales, due to the lack of data to support these amounts, the Board did not find these time adjusted sales useful in determining the correct current value for the Subject Property. Sales 3 and 5 occurred within the shoulder years of January 1, 2016 valuation date. Sales 1, 2 and 4 properties sold from 2010 to 2012 in the 2008 assessment cycle. Notwithstanding Ms. Steiner testimony that there are lack of sales in the Township, using these sales that took place in the 2008 assessment cycle are too far removed from the valuation date of January 1, 2016. Moreover, MPAC’s lack of data on the time adjustments makes MPAC’s time adjustment sales less reliable. Consequently, the Board finds Sales 1, 2, and 4 of limited assistance in determining the correct current value for the Subject Property.

36The Board compared the characteristics of Sales 3 and 5 properties to make a finding whether the sales are inferior, relatively comparable or superior to the Subject Property. Ms. Steiner confirmed with the Board that Sale 3 is an open market sale, which sold June 2016 for a sale amount of $15,000 and the Sale 5 property sold December 2014 for $4,000. These two sales are both within the shoulder years of the valuation date of January 1, 2016. The Board finds that the Sale 3 property is superior to the Subject Property. It is developed, it has a driveway access to Highway 17, compared to the Subject Property that has a “potential highway access”. Sale 3 property has some asphalt and concrete on it, its photograph in MPAC’s valuation report looks more superior to the Subject Property, which is undeveloped. Although the acreage of Sale 3 property is smaller than the Subject Property, it is developed. This in addition to other factors may account for its higher assessment by MPAC as of January 1, 2016 at $13,500, while MPAC assessed the Subject Property at $8,700. The Board agrees with the Appellant that in terms of marketability, the Sale 3 property is superior to the Subject Property, it sold at $15,000 and as Ms. Steiner testified, this property is currently being used as a parking lot. According to Ms. Steiner, the Sale 5 property is inferior to the Subject Property, although it is undeveloped, it is located in the far west part of the Township, away from the main downtown core and it has a development challenge due to its depth of 56.89 sq. ft. The Board agrees with MPAC that this sale is inferior to the Subject Property, although it has a larger lot, this property is inferior to the Subject Property due to its location and its effective depth.

37The current value of the Subject Property is established using Sales 3 and 5. They both have sale prices of $15,000 and $4,000 respectively. The mid-point of the current value range is $9,500. According to Ms. Steiner, all the properties including the Subject Property received a downward neighbourhood adjustment of (-49%) as the parties admitted that the market in the Township is flat. The Board applied this (-49%) downward adjustment to the mid-point of the current value range to obtain a correct current value of $4,655. The Board therefore determines that the correct current value of the Subject Property is $4,655.

Issue No. 2: 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.

Equity Analysis

38Section 44.(3)(b) of the Act directs that after determining current value, the Board shall 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.”

39The burden of proof rests with the party that alleges that it would be inequitable to assess the Subject Property at its current value, and in this appeal is the Appellant. The Appellant has to establish, on a balance of probabilities, that an equitable reduction is required. The Appellant did not provide any evidence. MPAC submits that the Appellant did not provide any statement of issues and it does not believe that equity is an issue in this appeal.

40The Board finds that there is no evidence to prove that an equitable reduction is required.

CONCLUSION

41Based on all the evidence, the Board determines the correct current value of the Subject Property to be $4,655 and determines that this correct current value is equitable with the assessment of similar properties in the vicinity and therefore no equity adjustment is required.