Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 14, 2020

FILE NO.: WR 164092

Assessed Person(s): William Howard Gardiner, Katherine Anne Hambly

Appellant(s): William Howard Gardiner, Katherine Anne Hambly

Respondent(s): Municipal Property Assessment Corporation Region 16

Respondent(s): Township of Severn

Property Location(s): 3332 Beach Club Boulevard

Municipality(ies): Township of Severn

Roll Number(s): 4351-010-008-26792-0000

Appeal Number(s): 3322358, 3362195 and 3407559

Taxation Year(s): 2018, 2019 and 2020

Hearing Event No.: 728894

Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31,

APPEARANCES:

Parties	Representative
William Howard Gardiner, Katherine Anne Hambly	Katherine Hambly
Municipal Property Assessment Corporation	David Rose
Township of Severn	No one appeared

HEARD: February 12, 2020 by telephone conference call

ADJUDICATOR: Jennifer Griffith, Member

DECISION

OVERVIEW

1William Howard Gardiner and Katherine Anne Hambly (the “Appellants”) are the owners of 3332 Beach Club Boulevard (the “Subject Property”). They filed an appeal for the 2018 taxation year with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”). Pursuant to s. 40(26) of the Act, the Appellants are deemed to have brought the same appeal in respect of the 2019 and 2020 taxation years. The Subject Property is located in the Township of Severn.

2It is the Appellants’ position that the Municipal Property Assessment Corporation’s (“MPAC”) current value assessment of $602,000 is too high and that the correct current value should be $520,000. MPAC takes the position that the correct current value is $562,000. No one appeared on behalf of the Township of Severn (the “Township”).

Background

3Ms. Hambly represents the Appellants and is of the view based on comparable properties that the correct current value is $520,000.

4David Rose appears for MPAC. It is MPAC’s position based on sales evidence that the correct current value is $562,000.

5Pursuant to s. 40(11) of the Act, the Township is a party to this proceeding however, no one appeared on behalf of the Township.

Issues for the Hearing

6At issue in this proceeding is:

1. What is the determination of the current value of the Subject Property for the 2018, 2019 and 2020 taxation years based on a direct comparison approach? a. Direct Comparison Approach based on sales

RESULT

7The Board finds the correct current value of the Subject Property is $562,000 for the 2018, 2019 and 2020 taxation years for the reasons set out below.

8Pursuant to Section 44(3)(b) of the Act a further reduction is not required.

9The assessment is therefore reduced from $602,000 to $562,000 for the 2018, 2019 and 2020 taxation years.

ANALYSIS

Description of Subject Property

10The Subject Property is a one-storey residential dwelling. The Property Code is 369 Vacant Land Condominium (Residential – Improved), with an effective site area of 0.09 acre, a total building area of 1,135 square feet, with a quality of construction rating of 7.5 and built in 2016.

Issue 1 - What is the correct current value of the Subject Property for the 2018, 2019 and 2020 taxation years?

11In determining the correct current value, the Board references s. 19(1) of the Act which states that the assessment of land shall be based on its current value, which is defined 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”. In other words, what is the current value in an arm’s length and market-tested sale of the property on the valuation date or close to it. The valuation date for the 2017 to 2020 taxation years is January 1, 2016.

12In reviewing the following evidence presented by MPAC in support of current value, the Board finds the best evidence is the builder’s sale of $697,517 for the Subject Property in 2016. The Board prefers the builder’s sale of the Subject Property, because it was purchased from the same builder as the other four builder’s sales presented by MPAC (including two sales from the Appellants’ list), located in the same unique area and subject to the same sale conditions as these four suggested comparable properties. The Board finds the builder’s sale of the Subject Property in 2016 represents the best evidence of an arm’s length transaction between a willing buyer and a willing seller pursuant to s. 19(1).

13Although the best evidence of current value ($697,517) is higher than the original returned assessment of $602,000 the Board will not increase the returned assessment. However, MPAC presents a revised returned assessment of $562,000 due to a change in the quality class of the Subject Property which the Board accepts. Therefore, the Board finds the correct current value is $562,000.

Evidence in Support of Current Value

14MPAC presented a Valuation Report, dated November 4, 2019 . During his testimony, David Rose, a representative of MPAC, stated that the Subject Property was purchased as a “builder’s sale” for $697,517 on December 16, 2016.

15In support of current value, Mr. Rose relied on the following four builder’s sales of suggested comparable properties, which occurred over the period 2015 and 2017. Mr. Rose provided both the actual and time-adjusted sale prices and relies on the Direct Comparison Approach, which estimates the current value of the Subject Property by adjusting the sale price of other sold properties for differences in property characteristics between the Subject Property and other sold properties. The following is the analysis of the four suggested comparable properties:

Issue 1a – Direct Comparison Approach

SALES ANALYSIS

4 SUGGESTED COMPARABLE PROPERTIES	LOT SIZE (acres)	TOTAL BUILDING AREA PER SQUARE FOOT (“sq. ft.”)	SALE DATES	SALE PRICE	TIME ADJUSTED SALE PRICE (“TAS”)	TAS PRICE PER (sq. ft.)
3327 Summerhill Way	0.09	1,212	2015	$402,573	$462,858	$381.89
3324 Beach Club Boulevard	0.07	2,134	2015	$537,758	$569,550	$266.89
3354 Beach Club Boulevard	0.08	1,680	2017	$732,194	$601,600	$358.09
3338 Beach Club Boulevard	0.07	2,210	2017	$765,800	$622,863	$281.83
Median	0.075	1,907	2016	$634,976	$585,575	$319.96
Subject Property	0.1	1,135	2016	$697,517	$610,437	$537.82

Note: Subject Property is Assessed at $602,000 ($530.39 per sq. ft.)

16Based on the above analysis, Mr. Rose estimated the current value as $562,000 based on the most comparable properties.

Additional Evidence

17Mr. Rose testified that the Subject Property is located on a premium lot on the south side of the community nearest the lake. He further stated that each buyer on the southern horseshoe portion of Beach Club Boulevard paid a substantial lot premium and that the Appellants state that they paid a premium of $180,000 for their lot.

18Mr. Rose also testified that after a review of the model of the Subject Property, MPAC determined that the quality of construction should be changed from a rating of 7.5 to a 7, which results in a reduction of $40,000. Based on this change, Mr. Rose revised the returned assessment to $562,000 ($602,000 - $40,000).

19In support of current value, Ms. Hambly presented a list of twenty-four suggested comparable properties and relied on only seven of the twenty-four suggested comparable properties. Ms. Hambly testified that although these seven suggested comparable properties are larger and are located on the same street as the Subject Property, they are assessed significantly lower than the Subject Property which is much smaller.

20These seven suggested comparable properties are located at 3340 Beach Club Boulevard; 3327 Beach Club Boulevard; 3324 Beach Club Boulevard, sold in 2015 at a time adjusted sale price of $569,550; 3319 Beach Club Boulevard; 3316 Beach Club Boulevard; 3354 Beach Club Boulevard, sold in 2017 at a time adjusted sale price of $601,600; and 3325 Beach Club Boulevard. The two sales at 3324 Beach Club Boulevard, sold in 2015; and 3354 Beach Club Boulevard, sold in 2017 are also presented by MPAC and form part of MPAC’s Direct Comparison Approach sales analysis.

21These seven suggested comparable properties have on average a total building area of 1,877 sq. ft., two-storey, quality rating 7.5, year built 2016 and returned assessment of $572,000. This is compared to the Subject Property with a total building area of 1,135 sq. ft., is a bungalow, built in 2016 and assessed at $602,000 (revised to $562,000 due to a change in quality rating from 7.5 to 7).

22Ms. Hambly testified that she paid a premium of $180,000 for the Subject Property’s lot and claims that the property at 3340 Beach Club Boulevard paid $350,000 for their premium lot. Ms. Hambly argues that although this suggested comparable property is a waterfront property with a total building area of 1,876 sq. ft. on a premium lot, it is assessed slightly higher at $656,000, which is only $54,000 more than the Subject Property.

Findings on Issue 1

23In reviewing the above evidence presented in support of current value, the Board finds the best evidence is the builder’s sale of $697,517 for the Subject Property in 2016.

24Although the best evidence of current value ($697,517) is higher than the original returned assessment of $602,000 the Board will not increase the returned assessment. However, MPAC presented a revised assessment of $562,000 due to a change in the quality class of the Subject Property from a 7.5 to a 7, which the Board accepts. Therefore, the Board finds the correct current value is $562,000.

25Regarding MPAC’s four other builder’s sales of the suggested comparable properties at 3327 Summerhill Way, 3324 Beach Club Boulevard, 3354 Beach Club Boulevard and 3338 Beach Club Boulevard, the Board finds the most comparable properties are the three sales on Beach Club Boulevard on the same southern side as the Subject Property with a median lot size of 0.07 acres, total building area of 2,134 sq. ft., year built 2017 and sale price of $732,194. However, the Board rejects these sales, because the Board prefers the builder’s sale of the Subject Property in 2016. In this case, the Board finds the builder’s sale of the Subject Property is the best evidence of current value, because it is the sale price a willing buyer paid to a willing seller in 2016

26The Board rejects the Appellants’ seven suggested comparable properties because five of the suggested comparable properties were not sold; and the two that were sold were also presented by MPAC and were rejected.

27The Board also rejects the Appellants’ argument that the Subject Property is assessed higher than the seven suggested comparable properties presented, even though the Subject Property is significantly smaller. On the contrary, the Board finds that on average these two-storey suggested comparable properties which are located on both the northern and southern side of Beach Club Boulevard are assessed higher at $572,000 than the Subject Property. The Board also finds that suggested comparable properties located on the southern side of Beach Club Boulevard (same side as the Subject Property) are assessed higher at $639,000 than suggested comparable properties on the northern side of Beach Club Boulevard at $484,000.

28Regarding Ms. Hambly’s argument that the Subject Property paid a premium of $180,000 for the lot and is assessed slightly less ($54,000) than the suggested comparable property at 3340 Beach Club Boulevard who paid $330,000 for their lot. The Board finds that the premium paid for the lots is part of the overall sale price paid for the respective properties. The Board finds that the returned assessment is based on several characteristics (building, quality of construction, lot etc.) and that the difference in the returned assessment of the Subject Property and 3340 Beach Club Boulevard cannot be solely attributed to the premium paid for the lot. Therefore, the Board puts no weight on this argument.

CONCLUSION

29The Board finds the correct current value of the Subject Property is $562,000 for the 2018, 2019 and 2020 taxation years.

30The assessment is therefore reduced from $602,000 to $562,000 for the 2018, 2019 and 2020 taxation years.