Taddeo v. Municipal Property Assessment Corporation, 2019 CanLII 94119

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

October 03, 2019

FILE NO.:

WR 161795

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):

509 Main Street

Municipality(ies):

Township of Ignace

Roll Number(s):

6001-000-001-41800-0000

Appeal Number(s):

3260259, 3315069 and 3368447

Taxation Year(s):

2017, 2018 and 2019

Hearing Event No.:

718668

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 509 Main Street (the “Subject Property”). The Subject Property is a vacant commercial land with an effective frontage of 100 feet, an effective depth of 180.55 feet for an 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 further testified that she inspected the property on March 14, 2017, and the Appellant stores vehicles on the land as part of the Appellant’s towing business. She further testified that during the inspection, she did not see any significant issue with the topography of the Subject Property and she saw some vehicles on it and it is partially treed. Ms. 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.

17Ms. 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

18In 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 also 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.

19Ms. 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. 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 added 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.

20Ms. 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.

21Ms. 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. Ms. Steiner concluded that this current value of the Subject Property 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. She added that the 2012 CVA of the Subject Property was $9,300 and the Appellant did not appeal the 2012 assessment.

22Ms. Roper requested that the Board confirms the return value of the Subject Property at $8,700.

Appellant’s Submissions

23The Appellant did not serve and file any evidence. He used MPAC’s valuation report to make his submissions to the Board.

24The Appellant submitted that all MPAC’s five sales are superior to the Subject Property but they are still assessed less than the Subject Property. He cross-examined Ms. Steiner regarding the aerial photograph of the Subject Property and the other vacant commercial lots that he owns in MPAC’s valuation report. According to the Appellant, and as seen in the valuation report, there is a double yellow line delineating the Appellant’s five vacant land properties from the strip of land next to Highway 17. He submitted that this strip of land is separately deeded and consequently, there is no access from the Subject Property to Highway 17, except through this strip of land. Ms. Steiner testified that the mapping error has been corrected by MPAC’s land parcel unit and that the vacant commercial lots owned by the Appellant including the Subject Property extend to Highway 17 and there is no restriction to access the highway. Ms. Steiner added that this is corroborated in the legal description of the Subject Property as stated in MPAC’s valuation report as “PLAN M292 PT LOT 7 PCL 17219 & PT PART2 KR2088 PCL 27545”. Ms. Steiner testified that the PART 2 in the legal description refers to the strip of land. Ms. Roper further advised the Board that the corrected version of the map could not be provided to the Board since the materials to be used at the hearing had already been served and filed. During cross-examination, Ms. Steiner admitted that there could be a “potential” highway access, not there was an actual access to Highway 17 and that it currently has no driveway.

25The Appellant used the photograph of the Subject Property in MPAC’s valuation report to testify that there is a 10-foot ditch between the highway and the Subject Property. Ms. Steiner disagreed with him by stating that there is no ditch on the Subject Property that would affect the value of the Subject Property.

26The Appellant further submitted that MPAC’s assessment technology was not advance in order to capture the topography of the Subject Property. He indicated that it was not leveled and he will require money to fill it. Ms. Steiner testified that during the inspection she did not notice any significant issue with the Subject Property’s topography, which she could have included in MPAC’s valuation report and that the Subject Property is leveled.

27The Appellant also argued that MPAC’s valuation report is not accurate as Ms. Steiner should have taken photographs of the condition of the Subject Property during her inspection. Ms. Steiner responded that it would have been helpful to take photographs; however, since the Subject Property is treed, it was unnecessary.

28The Appellant questioned Ms. Steiner on the restrictions a property owner may encounter with the Ministry of Transportation Ontario (“MTO”) if the property owner attempts to include access without MTO’s consent. Ms. Steiner advised that she is not an employee of MTO and has no knowledge of this.

29The Appellant submits 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 further argued 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. 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. The Appellant further testified 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.

31During cross-examination, Ms. Roper asked the Appellant why he did not present his own photographs if he believes MPAC’s valuation report is inaccurate. The Appellant stated that he is an average taxpayer and he chose to rely on MPAC’s information and that he had the pictures in his mind. He also stated that he expected Ms. Steiner to state the condition of the Subject Property and provide the necessary downward adjustments.

MPAC’s Submissions

32Ms. Roper submitted that the Appellant’s submissions to the Board are opinion based; 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.

33Ms. Roper therefore submits that the Board should attach little weight to it.

Findings on Issue 1

Board’s Analysis – Correct Current Value

34Under 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.

35Apart 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 price 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.

36The Appellant further submitted that the Subject Property qualifies for downward adjustments to its CVA of $8,700 due to its topography, its lack of access to Highway 17 and the declining market forces. The Board accepts MPAC’s evidence that the strip of land between the Subject Property and Highway 17 is part of the Subject Property and the other vacant commercial lots owned by the Appellant. As Ms. Steiner testified that this was only a mapping error and in the full legal description of the Subject Property, PART 2 is this strip of land. Ms. Steiner further directed the Board to this legal description being: PLAN M292 PT LOT 6 PCL 17219 & PT PART 2 KR2088 PCL 27545.

37Ms. Steiner further 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. This marks a difference between the Subject Property and MPAC’s sales comparables with access to Highway 17. 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. Ms. Steiner testified that MPAC had already recognized that the Subject Property is undeveloped, and it did not apply a 100% upward adjustment to its CVA. However, it applied a downward neighbourhood adjustment of -49% to all the properties including the Subject Property. This adjustment accounts for the declining market force.

38The 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, 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.

39The 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 the market in Ignace 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.

40The 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 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 effective site area of Sale 3 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, Sale 3 property is superior to the Subject Property, it sold at $15,000 and as Ms. Steiner testified, Sale 3 is currently being used as a parking lot. According to Ms. Steiner, 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.

41The current value of the Subject Property is established using Sales 3 and 5 properties. 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 of Ignace 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)](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 $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.