Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: March 31, 2020 FILE NO.: WR 163043 Assessed Person(s): Richard Newcombe, Linda Sincennes Appellant(s): Richard Newcombe, Linda Sincennes Respondent(s): Municipal Property Assessment Corporation Region 04 Respondent(s): Township of Laurentian Valley Property Location(s): 18 Lapointe Street Municipality(ies): Township of Laurentian Valley Roll Number(s): 4766-074-065-20155-0000 Appeal Number(s): 3232462, 3292261, 3348148 Taxation Year(s): 2017, 2018, 2019 Hearing Event No.: 726577 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES

Parties	Representative
Richard Newcombe and Linda Sincennes	Self-represented
Municipal Property Assessment Corporation	Roxanne Poulin
Township of Laurentian Valley	No one appeared

HEARD: November 8, 2019 in person

ADJUDICATOR(S)

Pierre R. Lavigne, Member

DECISION

OVERVIEW

1Richard Newcombe and Linda Sincennes (the “Appellants”) are the owners of a vacant waterfront lot in the Township of Laurentian Valley, in the County of Renfrew (the “Subject Property”). They have appealed the assessment of the Subject Property to the Assessment Review Board (the “Board”) for the 2017 taxation year of $148,000 as too high because of flooding risk and the hardness of the local well water. They claim the correct value is $113,000.

2The Appellants’ appeal is for the 2017 taxation year. As their appeal was not disposed of by March 31, 2018 s. 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) deems the assessment for the 2018 and 2019 taxation years to have also been appealed.

Issues for the Hearing

3The issues to be determined in the hearing are as follows:

1. a determination of the current value of the subject property; a. consideration of comparable properties; b. whether a reduction should be made for flood risk; c. whether a reduction should be made for hard water; and,
2. whether an equity reduction in the current value should be made to compensate for the assessment of similar properties in the vicinity.

RESULT

4For the reasons that follow, the Board reduces the assessment of the Subject Property for the 2017, 2018 and 2019 taxation years from $148,000 to $123,200.

ANALYSIS

5The Appellants had three main complaints in relation to the assessment: the size of the increase – 50% over their 2012 valuation year assessment of $98,000; a claim for a reduction for flood risk; and lastly a reduction for hard well water. I will consider these sub-issues as I conduct my analysis of the current value.

Description of the Subject Property

6The Subject Property is a vacant waterfront lot in the Township of Laurentian Valley, in the County of Renfrew. The lot has 150 feet of frontage on the Ottawa River and a depth of 230 feet, with an area of 0.94 acres.

Issue 1 – Current Value

Issue 1a – Consideration of Proposed Comparable Properties

7MPAC’s witness was Jennifer Gruntz, A.I.M.A. (Associate, Institute of Municipal Assessors). In her report she suggested the sales of vacant waterfront, numbered 1 to 8 in the table below, as comparable for the purpose of direct comparison analysis. The Appellants submitted sales numbered 9 and 10.

Sale	Address	Date	Price	Distance (kms)
1	Fairway Dr.	2018-Nov 5	$195,000	0.8
2	Mountainview Drive	2016-May 17	$175,000	8.5
3	45 Heron Rd.	2018-May 31	$150,000	2.0
4	49 Heron Rd.	2015-Sept 14	$130,000	2.0
5	1032 Lapointe Trail	2014-May 6	$150,000	24.7
6	Rantz Road	2012-June 22	$125,000	11.6
7	Breaker Bay Lane	2017-Nov. 14	$165,000	34.3
8	Round Lake	2015-Oct. 8	$223,500	35.8
9	Branch Trail	2013-Dec 13	$160,000
10	Branch Street	2015-Aug 19	$172,000

8In Ms. Gruntz’s opinion Sale Nos. 1 to 5 were very comparable, with Sale No. 3 being the most comparable.

9Mr. Newcombe stated that his lot was not on a sheltered part of the river, that the shore was rocky with no beach or possibility of docking or mooring, contrary to some of the comparables.

10In addition to suggesting sales of comparable properties, Mr. Newcombe submitted articles from the media indicating average price changes over time for various areas of Laurentian Valley and nearby Pembroke. Mr. Newcombe’s evidence of changes in the number and value of building permits, average assessment increases in his vicinity of Laurentian Valley or nearby Pembroke, are not evidence of the value of waterfront lots determined from a recognized method of value determination: direct sales comparison, income or cost approach. The Board agrees with Ms. Gruntz that when dealing with the sale of land the direct comparison approach is the best approach to obtain indications of value when we have evidence from comparable sales of vacant land.

11Mr. Newcombe also presented evidence of average values of built upon waterfront properties in the locality minus average construction costs of average size residences to derive average land values. The use of such broad averages and the use of the cost approach to derive residual land values is not the best evidence to value vacant land where, as in these appeals, we have evidence of comparable sales of vacant land.

12One of Mr. Newcombe’s complaints was the size of the percentage increase in assessment between his 2012 valuation year assessment of $98,000 and the 2016 valuation year assessment of $148,000. The Board has previously held that arguments about percentage increases from earlier assessment years cannot be given much weight since each re-assessment is a completely new exercise based on information gathered for the new valuation date. (see White v. Municipal Property Assessment Corp., Region No. 7, [2006] O.A.R.B.D. No. 241, paragraph [10]). Mr. Newcombe is aware of this as, on his documentary evidence, his 2008 base year assessment for the Subject Property was $121,000.

13Pursuant to s. 19.2(1) of the Act the legislated valuation day is January 1, 2016. MPAC’s witness testified that it was her opinion that to have sufficient sales data she included sales up to 42 months away from the valuation date and time adjusted them for purposes of comparison.

14It is the Board’s practice to usually consider sales within one year of the valuation date (see Tranter v Municipal Property Assessment Corporation, Region 02, 2019 CanLII 70205 (ON ARB) paragraphs [61] to [62]). For this reason, the Board will firstly consider MPAC’s suggested Sale Nos. 2, 4 and 8 and Mr. Newcombe’s suggested sale No. 10 as these sales are within one year of the legislated valuation day.

15Mr. Newcombe objected to the comparability of MPAC’s proposed Sale No. 2, Mountainview Drive. This property is within walking distance of major shopping in the adjoining City of Pembroke. It is an urban lot, while the Subject Property is in a more rural recreational setting approximately seven kilometers (“kms”) from the urban area. The Board agrees with Mr. Newcombe that Sale No. 2, Mountainview Drive, is not comparable based on dissimilarity of location.

16Mr. Newcombe objected to the comparability of MPAC’s proposed Sale No. 8, Round Lake, 35.8 kms from the Subject Property. He stated that this property was not on the Ottawa River but on an inland lake and was 35.7 kms from the Subject Property. He submitted that due to its location characteristics and distance this was not a sale of comparable property for direct comparison purposes. The Board agrees with Mr. Newcombe that Sale No. 8, Round Lake, is not comparable.

17The elimination of Sale Nos. 2 and 8 brings the number of comparables to two sales within one year of the valuation date. Two sales within the shoulder years justifies the consideration of the next sale closest in time to the valuation day of January 1, 2016. The Board will therefore also consider Sale No. 5 of May 6, 2014. The sales retained for comparison are Sale Nos. 4, 5 and 10.

Sale No. 4, 49 Heron Drive

18MPAC’s witness describes this property as follows:

This property is located on the Ottawa River, again just a little over 2.0 kilometers away from the Subject. It has less frontage, at only 114.34 feet, but has more depth and a larger overall parcel size of 2.22 acres. The waterfront is listed as shallow, with weedy/algae portions. When considering the weedy shoreline, it could be considered slightly inferior. This property sold in September 2015 for $130,000.

Sale No. 5, 1032 Lapointe Trail

19MPAC’s witness describes the property as follows:

This property is located on the Ottawa River, but in the Municipality of Whitewater Region, almost 25 kilometers from the Subject. It has more frontage, at 211.06 feet, but is configured with less depth and a smaller overall parcel size of .86 acres. It is listed as having a sandy beach, but is on a deep, fast running portion of the Ottawa River. The topography to the water is steep, with seasonal road access. It sold in May of 2014 for $150,000 and is currently improved. Due to the seasonal access and topography differences, this location would be considered inferior.

20Sale No. 10, Branch Street, is also in the Municipality of Whitewater Region. This lot has a water frontage of 164 feet and an area of 1.44 acres. It is described as having a sandy shoreline. It sold on August 19, 2015 for $172,000. Mr Newcombe considered this property to be superior to the Subject Property because of its larger frontage, acreage and sandy shoreline.

Findings on Issue 1a

21The Board agrees with Mr. Newcombe that Sale No. 10 is superior to his lot. The Subject Property’s value should therefore, be less than $172,000.

22The Board disagrees with MPAC that Sale No. 5 is inferior to the Subject Property. It is more clearly characterized as comparable to the Subject Property. But for the seasonal access and topography, this sale would be clearly superior as it has more frontage and a sandy shoreline. These positive and negative adjustments are likely to balance themselves out.

23As Sale No. 4 is slightly inferior, Sale No. 5 mostly comparable, and Sale No. 10 superior, the indication of value range is from $130,000 to $172,000 but tending towards the lower end of the range as Sale No. 4 was, on the evidence of MPAC, only slightly inferior. The Board finds the value of the Subject Property, before any consideration of flooding risk and hard water to be $140,000.

Issue 1b – Reduction for Flooding Risk

24All parties agree that in the springs of 2017 and 2019 there was major flooding of the Ottawa River. This affected areas along the river and the nearby City of Pembroke. Mr. Newcombe testified he had been on the river all his life and had never seen such flooding. There was significant property damage. Mr. Newcombe stated that in some areas the water was so high people were kayaking in their kitchens.

25Mr. Newcombe entered into evidence a Lot grading plan for the Lapointe subdivision prepared in May 1989 by Janota Patrick, Engineering Consultants. The plan includes the Subject Property. The plan shows the 114.2 metre, 100-year flood contour line running through the Subject Property such that two thirds of the lot has an elevation below this contour line. The plan includes the following statement “All fill placed between contour 113.0 and 114.2 must be floodproof to elevation 114.20 with heavy pit run protected with riprap and/or with sod.” Mr. Newcombe testified that his understanding of the 100-year contour line was to prohibit any openings, such as basement windows or door sills in any built structures below this line.

26He contends that the elevation of the Subject Property and the history of recent floods in the area are factors that depreciate his land value.

Findings on Issue 1b

27It is important to understand that the assessment is made based on the state and condition of the lot on the roll return date (see General Motors of Canada Limited v Municipal Property Assessment Corporation, Region No. 27, 2017 CanLII 3664 (ON ARB), paras. 11-12), but with market values of the statutory valuation day of January 1, 2016.

28Pursuant to s. 36(2) of the Act, the roll return date for the 2017 taxation year was the second Tuesday of December 2016.

29On January 1, 2016, on Mr. Newcombe’s evidence, there had never been floods such as those experienced in the springs of 2017 and 2019. On that day, based on past history, buyers and sellers would have discounted the flooding risk as more theoretical than real.

30To consider changes in valuation day market perceptions of risks, as a result of the realization of risks occurring after the valuation day, defeats the purpose of a fixed valuation day. It is market perception at the valuation day that counts.

31Accordingly, in the absence of damage to the Subject Property on the state and condition date, flooding occurring after the valuation day of January 1, 2016 is not evidence that can justify a market value reduction.

Issue 1c – Adjustment for Hard Water

32Mr. Newcombe’s residence is on the lot immediately adjacent to the Subject Property. Neither the Subject Property, nor Mr. Newcombe’s adjacent residence, are serviced by the municipal water supply. Mr. Newcombe conclusively established that the well water in the area is extremely hard. He testified eloquently to the consequences of hard water. He had used the water in his residence’s hydronic heating system. This severely damaged the system and plumbing, causing him to incur approximately $50,000 in repairs.

33He subsequently had the water tested. The report concluded that the water hardness made it unsuitable for most domestic purposes without installation of a reverse osmosis filter and a water softener/iron filter and regular maintenance. No cost of such measures was introduced into evidence.

34The evidence of MPAC’s witness was that, in her experience, availability of municipal water supply does not produce an increase in value of vacant land. In her experience, most buyers disregard or place little value on this feature. The average buyer does not have Mr. Newcombe’s adverse experience with hard water.

35Mr. Newcombe stated he would nevertheless be duty bound to bring the hardness of the water to any prospective buyer’s attention and this might affect the marketability and price.

Findings on Issue 1c

36The Subject Property is a vacant lot. MPAC’s professional opinion evidence was that the availability of municipal water supply does not produce any increase in value. The Appellants presented no contrary market evidence as to how much, if any, the presence of excessively hard water would have on the sale of vacant lots similarly affected. On this evidence the Board finds no reduction in value on account of hard water is proven.

Issue 2 – Whether an equity reduction in the current value should be made to compensate for the assessment of similar properties in the vicinity

37Section 44(3) of the Assessment Act provides as follows:

Same, 2009 and subsequent years

(3) For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land. 2008, c. 7, Sched. A, s. 13.

38In Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299, the Divisional Court held at paras. 9-11 that the Board is required on an appeal to consider the principle of Equity. The Court stated the purpose of these subsections as follows:

The purpose of these subsections is to allow the Board to adjust, what would otherwise be the appropriate assessment for a property, to bring that assessment in line with the assessment of other similar lands in the vicinity. This is consistent with a basic principle of the process under the Assessment Act, which is to ensure a proportional distribution of the tax burden, relative to the current values of lands, so that each property bears its “fair share.”

39In the present appeals MPAC presented no comprehensive equity study. The Board must therefore determine equity from the evidence presented of the comparable properties and their assessments. Though some of the proposed sales have not been retained because they were too far from the valuation day or insufficiently comparable, they are nevertheless sales of vacant land on water in the general area of the Subject Property and are therefore, similar lands in the vicinity for the purposes of determining equity. The time adjustment ratios are those found in the valuation report filed on behalf of MPAC.

40The calculation of the median and mean assessment to time adjusted sales ratios is as follows:

Sale	Address	2016 Assessment	Sale Date	Sale Price	Time Adjustment factor	Time Adjusted Sale Price	Assessment /TA Sale Price
1	Fairway Drive	140,000	2018.11.05	195,000	0.895	174,525	0.802
2	Mountainview	131,000	2016.05.17	175,000	0.981	171,675	0.763
3	45 Heron	158,000	2018.05.31	150,000	0.898	134,700	1.173
4	49 Heron	149,000	2015.09.14	130,000	1.015	131,950	1.129
5	1032 Lapointe Tr.	136,000	2014.05.06	150,000	1.081	162,150	0.839
6	Rantz Rd	164,000	2012.06.22	125,000	1.197	149,625	1.096
7	Breaker Bay Lane	161,000	2017.11.14	165,000	0.920	151,800	1.061
8	Round Lake	200,000	2015.10.08	223,500	1.011	225,959	0.885
9	Branch Trail	147,000	2013.12.18	160,000	1.197	191,520	0.768
10	Branch Street	157,000	2015.08.19	172,000	1.020	175,440	0.895

Median of the Assessment to Time Adjusted sales ratios is 0.89

Mean of the Assessment to Time Adjusted sales ratios is 0.87

Findings on Issue 2

41The median and mean assessment to time adjusted sales ratios indicate that similar properties are assessed at 87-89% of their time adjusted values at the January 1, 2016 valuation day. In order to make the assessment of the Subject Property equitable with respect to the assessment of similar land in the vicinity, an adjustment is required to reduce the correct current value of $140,000 to $123,200. This would make the assessment of the Subject Property 88% of its correct current value.

CONCLUSION

42The Board finds that the correct current value of the Subject Property at the January 1, 2016 valuation day is $140,000. The Board finds that an equitable reduction of $16,800 is required.

ORDER

43The Board orders that the assessment of the Subject Property for the 2017, 2018 and 2019 taxation years is reduced to $123,200.