Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

October 10, 2019

FILE NO.:

WR 162142

Assessed Person(s):

Janet Kirsten Scott

Appellant(s):

Janet Kirsten Scott

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 28

Respondent(s):

Township of Mcdougall

Property Location(s):

5 Demick Drive

Municipality(ies):

Township of Mcdougall

Roll Number(s):

4931-010-011-13330-0000

Appeal Number(s):

3338681 and 3367519

Taxation Year(s):

2018 and 2019

Hearing Event No.

721767

Legislative Authority:

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

Heard:

September 11, 2019 in Mcdougall , Ontario

APPEARANCES:

Parties

Representative

Janet Kirsten Scott

Self-represented

MPAC

Darren MacLean

Township of Mcdougall

No one appeared

DECISION OF THE BOARD DELIVERED BY LESLIE FLEMMING

BACKGROUND

Janet Kirsten Scott (the “Appellant”) is the owner of 5 Demick Drive (the “Subject Property”), which is a single-family dwelling located on the shores of Georgian Bay, in Township of McDougall (“Township”) near the Town of Parry Sound. The owner demolished a pre-existing residence, and built the Subject Property in 2016. The new home is 1716 square feet (“sq. ft.”) in size, situated on a lot which is 2.45 acres in size. The property has 256 feet of frontage on Georgian Bay, and the terrain could be described as rocky and steep. Demick Drive has seven homes/cottages on it, all with frontage on Georgian Bay. Ms. Scott lives in the home year round; it is not therefore a seasonal/recreational property.

1Pursuant to the provisions of the Assessment Act, R.S.O. 1990, c. A.31, as amended (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 day, January 1, 2016.

2MPAC has assessed the value of the Subject Property, as of January 1, 2016, at $1,039,000. The Appellant appealed the assessment on the ground that it was too high. She expressed frustration with the assessment of the previous residence located on the property, an older, smaller cottage of only 960 sq. ft. However, today’s appeal is in respect of the current assessment cycle only, and the previous assessment history of the property is not relevant to the years under appeal (2018 and 2019). For the current building and the current assessment cycle, the Appellant takes the position that the correct current value of the Subject Property is $845,662. MPAC submits that the current value assessment should be reduced to $975,000 for the 2018 and 2019 taxation years.

3Consequently, the Assessment Review Board (the “Board”) must determine the value of the Subject Property on January 1, 2016, for the 2018 and 2019 taxation years (“current value”).

4Pursuant to s. 40(11) of the Act, the Township is a party to this proceeding. However, the Township did not advise the Board of its position on the issues raised in these appeals, and no one appeared at the hearing on the behalf.

5Section 44(3)(b) of the Act, directs the Board to reduce the current value of the Subject Property if similar lands in the vicinity have been assessed at a lower value (“equitable reduction”). The purpose of this provision is to fairly distribute the municipal tax burden according to the value of the property possessed by each ratepayer. MPAC takes the position that an equitable reduction is not required. The Appellant must prove that an adjustment for equity is required, in this case, the Appellant did not assert that an equitable reduction is required, nor provided any evidence for such an adjustment. Therefore, in this proceeding, this ground for appeal is not in issue.

6At the completion of the hearing, the Board reserved its decision. For the reasons that follow, the Board finds that the current value of the Subject Property for the 2018 to 2019 taxation years is $975,000.

ISSUE

7The issue to be determined on this appeal is what is the correct current value of the Subject Property for the taxation years 2018 to 2019?

EVIDENCE, ANALYSIS AND FINDINGS

MPAC’S Evidence

8Darren MacLean represented MPAC and presented the evidence. Mr. MacLean is a property Valuation Analyst, and he is the individual who inspected the Subject Property in May, 2019.

10Mr. MacLean prefaced his testimony by advising that his recent inspection revealed some changes in the structure that had not been taken into account in the assessment. As a result, his opinion of current value had changed from $1,039,000 to $975,000. Among the changes cited were the size of the first floor living area was reduced, as were MPAC’s records of the finished basement area.

9Mr. MacLean explained the purpose of the Sales Ratio Trend Analysis he performed using 464 sales of vacant and/or improved residential lands in the vicinity, taking place over 85 months from 2012 to 2019. The purpose of the study is to calculate changes in value over time on a monthly basis, with the purpose of taking comparable property sales and calculating the value of each sale as at January 1, 2016. This allows direct comparisons of value to be made, assuming that the analysis of historical sales is accurate.

10Mr. MacLean also explained his choice of deriving value from comparing the sales of similar properties in the vicinity. This method is most frequently used in residential property assessments, because neither the cost method nor the income method are suited to residential property valuation. While no two properties are identical in this area of the province (frequently referred to as “cottage country”), adjusting for the difference in size, age, quality and amenities allows the assessor to estimate the value of the Subject Property.

11To assess the value of the Subject Property, MPAC used six comparable residential properties, four of which are single family residential homes on water and two of which are seasonal/recreational dwellings, first tier on water. The six sales ranged between November, 2012 through September, 2018. The site areas of these homes varied between 0.42 acres to 5.39 acres. Waterfront dimensions ranged between 116.47 feet to 368 feet. The properties were all characterized as 6.5 out of 10 or 7 out of 10 in respect of quality of construction. All but one (1058 Felsman Drive) appeared to have year-round road access, as does the Subject Property. Details of the most relevant of these comparable property sales appear in Table A below.

12The sales prices (with time adjustments to take them to January, 2016) ranged from $772,855 to $1,218,000.

13Mr. MacLean testified that the six comparable sales were either similar to the Subject Property or inferior. The last two sales, #5 (67 South Oakridge Road) and #6 (2 Mill Road) were smaller, older homes on smaller lots with less waterfront. They sold for the time adjusted prices of $792,168 and $772,855. Mr. MacLean submitted that these two homes were decidedly less valuable than the Subject Property, and that it would be more like the other four properties which sold for time-adjusted values of $945,019 to $1,218,810.

14Having made corrections to the first floor area and the basement area following his inspection this spring, Mr. MacLean concluded that the original assessed value of $1,039,000 should be reduced to $975,000 for 2017 and 2018. The current value was therefore $975,000 in his opinion.

Appellant’s Evidence

15Ms. Scott represented herself. She gave evidence and also provided the Board with documentary evidence that had been sent to the Board earlier but not received. MPAC had received copies of the documents in advance.

16Ms. Scott provided the Board with a schematic map of the Demick Road properties, numbered 1 through 7. She drew onto the map the cottage road that serves all the properties and cuts through her land. She illustrated her property boundaries and the forested portion of her lot, advising that it comprised approximately 75% of the property, not 25% to 50% has had been suggested by MPAC. She indicated in her evidence that the slope from the house to the road was approximately 30 degrees, making the topography steep and difficult for travel by car.

17The essence of Ms. Scott’s presentation was that her property is an odd shape (which she quite appropriately described as a “dogleg” shape) involving a narrow section along the cottage roadway, a fairly steep and narrow area leading toward the home through the forest, and then a very steep portion between the house and the waterfront. The other lots, shown on the map taken from the MPAC “About My Property” website appear to be much more compact, lacking the long narrow portion occupied by the right-of-way for the cottage road, and generally being wider at almost all points. Ms. Scott testified that her lot is only usable – as in buildable – on only one-quarter of the lot.

18Ms. Scott suggested that the most comparable properties were the other Demick Road properties because they share the same view, access (using the cottage roadway), and general location. Of the seven properties on Demick Drive, only two had been sold after January 1, 2012. They were 2 Demick Drive and 3 Demick Drive. While Ms. Scott provided evidence about all seven homes, the others had not been sold recently enough to give us a value for comparison. Both 2 Demick Drive and 3 Demick Drive sold for $1,100,000, in 2017 and 2016 respectively. Details of these two properties are shown on Table A below.

19Ms. Scott’s comments about the two Demick Drive sales comparisons are these:

1. 2 Demick Drive is a log home, architecturally designed. It had a new roof, new ceilings, new or refurbished hardwood floors and a new dock when it was sold in June of 2017. This home has 29 more feet of waterfront than the Subject Property, but a much larger site area at 7.67 acres.

2. 3 Demick Drive has a marginally longer waterfront, but a significantly larger living space (2,856 sq. ft.) as opposed to 1,716 sq. ft. at her home. The site area for this home is somewhat smaller than her own (2.03 acres as compared to her site area of 2.45 acres), but the lot is “squared off” and not an irregular lot like hers.

20Ms. Scott submits that these two homes, both new or recently refurbished, are superior to hers in many respects. She submits that it is unfair to value her home almost the same as these two clearly superior homes.

21Ms. Scott also carried out some calculations of value based on comparing the sizes of the different homes on the road. While the calculations were only partly based on sold properties, they give a clear idea of how she derived a value of under $900,000 for her home.

Appellants’ Submissions

22Relying on her evidence, the Appellant submits that the correct current value for taxation years 2018 and 2019 is $845,662.

ANALYSIS AND FINDINGS

23The Act provides that assessment of land shall be based on its current value. Current value is defined as:

… 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.

24Clearly the assessment of land is not a strictly scientific process, allowing various methods of arriving at current value. In residential properties, the most accepted method is the direct sales comparison method used by MPAC in this case. However, for this method to be as accurate as possible, it requires the use of sales that took place as closely as possible to the valuation day, or, in this case, January 1, 2016. Otherwise, the farther away in time a sale took place, the more of an adjustment is required to estimate the sales prices to a probable value in January, 2016. For that reason, the Board prefers evidence of sales occurring within six months of the valuation day, and, where that is not possible as here, sales that occur within one to two years of the valuation day.

25It is understandable that MPAC had to expand the window of time in order to find a number of sales to compare with the Subject Property. However, the Board is reluctant to look so far away in time as to a 2008 valuation day (which is the case with with 6 Bowers Bay Road). For that reason, the Board prefers to use the most up-to-date evidence of sales as possible. In looking at MPAC’s six comparable sales, the Board rejects Sale #2 (30 Murray Point Road, sold in August, 2013) and #4 (6 Bowers Bay Road, sold in November, 2012). However, the Board will accept the evidence provided on the sale of 2 Demick Drive, which sold in June, 2017, and 1058 Felsman, sold in 2018. While not in the “shoulder years”, these sales appear to be among the best evidence of values in the vicinity. The details of the remaining sales appear in Table A, below.

TABLE A – COMPARABLE PROPERTY SALES

SUBJECT

2 Demick

3 Demick

1058 Felsman

67 South Oakridge

2 Mill

Current Assessment

$1,039,000

$1,341,000

$1,119,000

$1,054,000

$699,000

$823,000

Date Sold

N/A

Jun 2017

Jun 2016

Sep 2018

Nov 2014

May 2015

TA Sale Price

N/A

$1,028,500

$1,076,650

$1,218,810

$792,168

$722,855

Eff. Frontage

256 ft.

285 ft.

265 ft.

323 ft.

116.47 ft.

233 ft.

Acreage

2.45

7.67

2.03

2.75

0.42

2.2

Yr. Built

2016

1989

1988

1958

1970

1990

First Floor area (SF)

1,716

2,058

2,856

1,573

1,293

1,415

Basement Area (SF)

1,574

1,850

2,247

729

1,461

1,415

Outbuilding

Det. Garage

Att. Garage

Det. Garage,

Att. Garage

Outbuilding

Att. Garage

SF Home (496 sf.)

Road Access

Private (year round)

Private (year round)

Private (Year round)

Seasonal Access

Year round

Year round

26In reviewing the details of the comparable property sales contained in the above-chart, we are able to see how the Subject Property compares. The following points stand out to the Board.

(a) While the Subject Property’s cottage dimensions are less than the average of the five comparable properties (average is 1,839 sq. ft.), it is the newest building with the advantage of two garages totalling 1,418 sq. ft. in size. These features clearly make this property more valuable than 67 South Oakridge Road and 2 Mill Road.

(b) The Subject Property site area is larger than the sizes of 3 Demick Drive, 67 South Oakridge Road and 2 Mill Road.

(c) The Subject Property would be clearly more valuable than both 67 South Oakridge and 2 Mill Road, which are smaller in every respect and quite a bit older. It would be somewhat less valuable than 2 Demick Drive given that property’s very large site area at more than three times the area of the Subject, and its slightly larger building area and slightly larger waterfront. It would be somewhat less valuable than 3 Demick Drive due to that property’s larger dwelling. However, 3 Demick Drive has a smaller waterfront by 9 feet and a slightly smaller acreage. Therefore, the Subject Property would be less valuable than its neighbours, 2 Demick and 3 Demick, but not substantially so given its relatively new construction and large garages.

(d) While the Appellant gave evidence as to the rather strange shape of the Subject Property’s site area, no evidence was led to help assess the effect this has on the property’s value. Consequently, the Board is unable to factor the shape of the lot into its consideration of current value.

27Based on the foregoing, the Board finds that $975,000 is the correct current value of the Subject Property. The Subject Property is newer and located on a larger site area than the properties at 67 South Oakridge and 2 Mill Road. These two properties are clearly inferior to the Subject Property. However, the Subject Property is clearly somewhat inferior to the other two Demick Drive comparable properties for the reason that the Subject Property residence is smaller (over 100 sq. ft. smaller than 3 Demick Drive) and its waterfront is marginally smaller. 2 Demick has over five acres more land than the Subject Property and 3 Demick Drive, so it is more valuable than both of these. When compared to 1058 Felsman, the Subject Property has less frontage on the water, and while it has a larger, newer residence, 1058 Felsman has a second single family home on the site plus a detached garage. These structures make it somewhat more valuable than the Subject Property. Because the Subject Property has more in common with the superior comparable properties, its current value should be closer to the superior comparable sales and not as close to the two older comparable sales.

28Based on the evidence and submissions before me, I find that the correct current value of the Subject Property is $975,000 for the 2018 and 2019 taxation years.

DECISION

29The correct current value of the Subject Property is $975,000 for the 2018 and 2019 taxation years.

30A reduction of the current value on the ground of equity is not required.

Leslie Flemming