Nelson Stewart Taddeo v. Municipal Property Assessment Corporation, 2019 CanLII 94118

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

ISSUE DATE: October 03, 2019 FILE NO.: WR 161793

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): 513 Main Street Municipality(ies): Township of Ignace Roll Number(s): 6001-000-001-42000-0000 Appeal Number(s): 3260257, 3314939 and 3368448 Taxation Year(s): 2017, 2018 and 2019

Hearing Event No.: 718670 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended Heard: July 17, 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 513 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 195.5 feet for a total effective site area of 0.45 acres. This property is part of five properties owned by the Appellant, for 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 $9,100 for the 2017 and 2018 taxation years and $6,400 for the 2019 taxation year. Justin Johnstone advised the Board that the roll return value was $9,100 and based on a review of the Subject Property and the Request for Reconsideration, a recommendation of $6,400 was made by MPAC, which was declined by the Appellant, consequently the return value of $9,100 is the value under appeal. The recommended value for the January 1, 2016 valuation date by MPAC is $6,400. Shelby Roper, MPAC’s advocate, requests that the Board confirms the recommended assessment of $6,400.

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 $1,960.

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 $9,100 to $1,960 for the 2017, 2018 taxation years and from $6,400 to $1,960 for the 2019 taxation year.

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 Subject Property on March 14, 2017 and that it is a wooded lot, treed and not cleared. During the inspection, she testified that she noticed there is a significant decline at the back of the Subject Property, covering approximately 50% of the lot. She further testified that MPAC adjusted the lot size of the Subject Property to account for the 50% of the lot with the lower grade, reducing it from 0.45 acres to 0.22 acres. Prior to this adjustment, she testified that the Subject Property measured an effective frontage of 100 feet and effective depth of 195.5 feet; but after the adjustment made by MPAC it now measures 100 feet for effective frontage and 98 feet for effective depth. During cross-examination, Ms. Steiner confirmed that due to the topography of the Subject Property, MPAC is valuing only 50% the Subject Property at $6,400.

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

Property	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	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 current value assessment (“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 received a 100% upward adjustment. She added that the Subject Property and Sales 4 and 5 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 the Sale 1 property 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% positive 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 as “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 Town 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 it 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 $9,100. However, Ms. Steiner argued that with the Subject Property’s adjusted lot size of 0.22 acres, it is comparable to the Sale 3 property, which has a lot size of 0.25 acres, and it sold for $15,000, therefore the recommended current value of the Subject Property at $6,400 is reasonable. Ms. Steiner also added that the 2012 CVA for the Subject Property was $9,500 and the Appellant did not appeal the 2012 assessment.

23Ms. Roper requested that the Board confirms the recommended value of the Subject Property at $6,400.

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 questioned Ms. Steiner on the accuracy of MPAC’s valuation report, by stating that Ms. Steiner did not include in the valuation report that there was a mine closure in the Township. Ms. Steiner testified that the mine closure occurred 20 – 30 years ago and based on the market, this would not be relevant. The Appellant disagreed with Ms. Steiner stating that the mine closure affected sales of properties in the Township.

26The Appellant further questioned the photograph of the Subject Property in MPAC’s valuation report, stating that there is a transition from a two-way lane to a four-way lane when approaching the downtown core on Highway 17. He further asked Ms. Steiner how this could have an impact on assessment. Ms. Roper objected to this question stating that Ms. Steiner could not speak for the Ministry of Transportation Ontario (“MTO”) policies since she is not an employee of MTO. However, Ms. Steiner stated that she will describe it more as turning off lanes for safety.

27The Appellant submitted that there is a ditch between the highway and the Subject Property which impacts its assessment, which Ms. Steiner disagreed with him by stating that it would not be a factor in its assessment, and that culverts could also be used for access to properties.

28The Appellant also questioned if Ms. Steiner measured the decline at the back of the Subject Property during the inspection and how she could have accurately quantified it. The Appellant emphasized that there were no photographs presented by MPAC of the decline at the rear of the Subject Property and MPAC has no access to advance technology that would reveal the decline on a map. Ms. Steiner stated that she provided an estimate based on the onsite inspection she conducted. The Appellant emphasized that her estimation could be wrong.

29The Appellant further argued that all MPAC’s sale properties 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’s 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. He also submitted that from the aerial view of Sale 1 in MPAC’s valuation report, it reveals that it has railway access and a creek running through it which could have influenced the sale price of $24,000. Ms. Steiner stated that this would not be a factor in the use of this property as a commercial vacant lot. The Appellant further argued that the Sale 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 the Appellant 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 for the Sale 3 property, some of the concrete from the store that was formally on it is still present on the land 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. He added that the Sale 5 property is polluted land. Ms. Steiner testified that she is not aware of this.

30The 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.

31In conclusion, the Appellant submitted that MPAC did not provide evidence to quantify the decline at the rear of the Subject Property and that MPAC’s description of the five comparable sales are not accurate. The Appellant further argued that common sense and reason must be used in valuing the Subject Property. He also argued that MPAC’s valuation report is not accurate and there are significant reasons for concern, citing that the valuation report does not reveal the actual state and condition of the Subject Property.

MPAC’s Submissions

32Ms. 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

33Under 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 an 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.

34Apart 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 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; therefore, the Board puts no weight on this evidence.

35The Appellant further submitted that the Subject Property qualifies for downward adjustments to its CVA, due to its declining topography at the back, its lack of access to Highway 17 and the ditch in front of it. The Appellant emphasized that Ms. Steiner did not measure the decline at the back of the Subject Property. Ms. Steiner testified that she provided an estimate of the adjusted size of the Subject Property although she did not provide any photographs. However, based on her onsite inspection of the Subject Property and her over 25 years’ experience as a property valuation specialist, MPAC adjusted the Subject Property’s lot size from 0.45 acres to 0.22 acres, resulting to only 50% of the lot size of the Subject Property being valued. The Appellant did not provide any evidence of this decline neither did he provide evidence to quantify it. If the Appellant wanted to dispute the declining topography of the Subject Property, he could have provided his own evidence to contradict MPAC’s evidence such as by providing photographs. MPAC has provided the Board with the best evidence. I am satisfied that Ms. Steiner’s first hand evidence and efforts to evaluate the Subject Property is more reliable and quantifiable than the Appellant’s bare statements which are not supported by any other evidence. The Board accepts MPAC’s quantification of the decline at the back of the Subject Property and also used this factor in arriving at the correct current value of the Subject Property.

36The Appellant further argued that there is a ditch in front of the Subject Property, which affects its value, and impedes access to Highway 17. Ms. Steiner testified that the Subject Property could have potential access to Highway 17 with a driveway or a culvert. 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 sales comparables with access to Highway 17. The Appellant insists that this 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. The Board read in its opening statement that the Board requires evidence 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.

37The 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 $9,100. 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.

38The 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 the Township 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.

39The 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 that the Sale 3 property 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. Ms. Steiner testified that Sale 3 is similar to the Subject Property due to its effective site area of 0.25 acres, while the adjusted size of the Subject Property is 0.22 acres. The Board finds that the Sale 3 property is superior to the Subject Property. It is a developed lot, it has a driveway access to Highway 17, compared to the Subject Property that has a “potential highway access”, it is wooded and treed and is undeveloped. Sale 3 property also has some asphalt and concrete on it, it is currently being used as a parking lot. Although the effective site area of Sale 3 is similar to the Subject Property however, as Ms. Steiner testified, that there is a “significant decline” at the back of the Subject Property. Due to this reason, MPAC adjusted the depth from 195.51 feet to 98 feet and as a result, MPAC only valued 50% of the size of the lot. This reveals that although the Subject Property’s effective site area is similar with Sale 3 property, the Subject Property is not comparable to Sale 3 property. A prudent and willing buyer would consider and review the specific details of the Subject Property and compare it with the market prices of other comparables with a significant decline at its rear before paying the purchase price. The evidence presented by MPAC does not reveal that Sale 3 property has this significant decline therefore it is not comparable to the Subject Property.

40According to Ms. Steiner, Sale 5 property is inferior to the Subject Property, although it is undeveloped like the Subject Property, 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 feet. The Board finds that this Sale property is relatively comparable to the Subject Property. Although the location is inferior to the Subject Property, the topography is similar. The lot size for Sale 5 is 0.55 acres due to its effective frontage of 421.16 feet. Sale 5 is also undeveloped like the Subject Property and due to this reason, MPAC did not provide the 100% upward adjustment for this Sale and the Subject Property. Sale 5 property was assessed at $10,000, while the Subject Property was returned at $9,100. Although the Sale 5 property is larger it sold for $4,000. This could be due to its location and development challenge which MPAC attributes to its depth of only 58.89 feet. The Subject Property equally has a significant decline at the rear with approximately 98 feet. The Board finds that the Sale 5 property is relatively comparable to the Subject Property, although not exact but relatively comparable than Sale 3 property and the correct current value for the Subject Property is $4,000, being the sale price of the Sale 5 property. The superior location of the Subject Property is accounted for in the larger size of Sale 5 property.

41Furthermore, 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 Ignace is flat. The Board applied this downward adjustment of (-49%) to the determined current value of $4,000 to provide a correct current value of $1,960. The Board therefore determines that the correct current value of the Subject Property is $1,960.

Issue No. 2: Whether there should be an equitable reduction of the current value pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html) (b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), and, if so, what the amount of this reduction should be.

Equity Analysis

42Section 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.”

43The 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.

44The Board finds that there is no evidence to prove that an equitable reduction is required.

CONCLUSION

45Based on all the evidence, the Board determines the correct current value of the Subject Property to be $1,960 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.