Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 12, 2020

FILE NO.: WR 164901

Assessed Person(s): Cindy L. Potter

Appellant(s): Cindy L. Potter

Respondent(s): Municipal Property Assessment Corporation Region No. 06

Property Location(s): 145 Emerson Road

Municipality(ies): Centre Hastings Municipality

Roll Number(s): 1230-224-010-07200-0000

Appeal Number(s): 3389510 and 3397976

Taxation Year(s): 2019 and 2020

Hearing Event No.: 730001

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

Parties

Representative

Cindy L. Potter

Self-represented

Municipal Property Assessment Corporation

Diane Simpson

Centre Hastings Municipality

No one appeared

HEARD: April 24, 2020 by telephone conference call

ADJUDICATOR(S): Joanne Laws, Member

DECISION

OVERVIEW

1Cindy L. Potter (the “Appellant”) is the owner of 145 Emerson Road (the “Property”), located in the Municipality of Centre Hastings. She filed an appeal for the 2019 taxation year with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c.A31 (the “Act”).

2Pursuant to s. 40(26) of the Act, the Appellant is deemed to have brought the same appeal in respect of the 2020 taxation year as well.

Background

3Diane Simpson appeared for the Municipal Property Assessment Corporation (“MPAC”). She submitted both a Valuation Report and an Equity Analysis Report. It is MPAC’s position, based on an inspection conducted on February 6, 2018, corrections to the property’s data, the cost approach to value and sales evidence, that the Property’s correct current value is $954,000 (rounded) in the Residential Tax Class and allocated as follows:

1. $634,478 FRU RT (Farmland on which farm residence exists)
2. $319,823 FL RT (Farmland)

4The Appellant takes the position that, compared to neighbouring properties, she pays an inequitable amount of property taxes.

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

Issues for the Hearing

6At issue in this proceeding is:

1. A determination of the current value of the Property;
2. Whether an equity reduction in the current value should be made.

Results

7I find that the correct current value of the Property is $954,000 in the Residential Tax Class, for the 2019 and 2020 taxation years.

8Pursuant to s. 44(3)(b) of the Act, a reduction for the purpose of making an equitable assessment is not required.

9Therefore,

1. For the 2019 taxation year the assessment is reduced from $1,060,000 to $954,000 and for the 2020 taxation year the assessment is confirmed at $954,000 in the Residential Tax Class.

ANALYSIS

Description of Property

10MPAC describes the Property as being located within a mainly rural and agricultural market called ‘Farm Neighbourhood 0603’ which includes the municipalities of Stirling/Rawdon, Centre Hastings, Trent Hills and Alnick/Haldimand.

11The Appellant purchased the Property in May 2016 for $860,000. The Property is a farm with a residence, secondary structures and farm structures used for farming purposes. There is a total of 150.9 acres of Class 3 and Class 6 farm lands.

12Although MPAC has assessed the Property as farm land used for farm purposes, the parties agree that the Appellant has not qualified for the Farm Property Class Tax Rate Program through Agricorp. As a result, the property is assessed in the residential tax class.

13The residence is a single family, two-storey, detached building, built in 1870. In 2017 a 2,286 square foot (“sq. ft.”) single-storey addition was added and MPAC calculates the current total living space at 5,450 sq. ft. Ms. Simpson, who inspected the property on February 6, 2018, after the construction, renovation and additions were complete, describes the house as well maintained and finished with above-average quality of materials.

14Also built in 2017 was a 762 sq. ft. attached garage and four uninsulated barns measuring 1,200 sq. ft., 320 sq. ft., 2,760 sq. ft. and 7,080 sq. ft. in size. In addition, there is a barn built in 1932 and a detached garage built in 1930. MPAC’s evidence is that building permits totalling $708,600 were taken out with the municipality and all work was completed except for a second residential addition valued at $85,000. The net value of the work permits completed is $623,600.

15Ms. Simpson made further changes to MPAC’s data on the Property including:

1. Amending the number of bathrooms from two-and-a-half to three-and-a-half.
2. Soil Class 3 from 65 to 35 acres
3. Soil Class 6 from 85.9 to 115.9 acres
4. An allowance was given due to hydro towers crossing through the property.

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

16MPAC presented a Cost Approach analysis estimating the current value of this property at $954,301 (or $954,000, rounded), apportioned as follows:

1. $730,605 for all improvement costs less depreciation
2. $223,696 for the land value.

17The Cost Approach for valuing farm properties involves estimating the cost to acquire the land alone (without improvements) and then adding the cost of the improvements less their depreciation and obsolescence. To determine the land value, MPAC presented six sales of farm land in the Property’s ‘Farm Neighbourhood 0603’ area.

18The Appellant purchased the Property in May 2016 for $860,000 in an open market and arm’s length transaction.

19The Appellant’s oral evidence is that the Property’s taxes are higher than other properties in the area. However, I was not provided with evidence that would allow me to make meaningful comparisons between the Property and other properties, such as tax class, whether a property qualifies for the Farm Property Class Tax Rate Program through Agricorp, sale and assessment values, lot and building sizes, building ages, number of buildings etc.

Findings on Issue 1

20Because this property experienced significant changes though new builds and renovations, it is important to understand that the assessment is made on the ‘state and condition’ of the property on the roll return date for each year (see General Motors of Canada Limited v Municipal Property Assessment Corporation, Region No. 27, 2017 CanLII 3664 (ON ARB), paras. 11-12) but with the market values of the valuation day.

21Pursuant to s. 36(2) of the Act, the roll return date for the 2019 taxation year is the second Tuesday of December 2018 and the roll return date for the 2020 taxation year is the second Tuesday of December 2019.

22Typically, the best evidence of the current value of a property is an arm’s length sale of that property on or near the valuation day. Here we have undisputed evidence that the Property sold in an open market sale on May 31, 2016, very near the valuation day, for $860,000. However, the evidence is that it underwent significant changes before MPAC’s inspection date of February 6, 2018. The building permit values for the completed improvements total $623,600. As such, the sale is not a reflection of the Property’s current value in 2019 and 2020.

23The only evidence I received regarding the Property’s current value is Ms. Simpson’s analysis for MPAC. Her analysis is based on the Cost Approach to Value, her inspection of the Property after the renovations, construction and additions were completed and a thorough review of the data for this Property.

24Accordingly, I find that the current value of this Property, as of the January 1, 2016 valuation day, for the 2019 and 2020 taxation years is $954,000. The Property is assessed wholly in the Residential Tax Class.

Issue 2 – Is an equitable adjustment of the current value required pursuant to section 44(3)(b) of the Act?

25The Appellant argued that she pays an inequitable amount of taxes for the Property relative to other nearby properties. In her submissions, only one other property, 369 Emerson Road, was specifically referenced. The Appellant described it as the most similar to her Property but that the owners pay $2,000 in taxes while her Property taxes are $14,448. She states that 369 Emerson Road is similar to the Property and described it as having more frontage, a horse arena, an attached barn and hay shed, numerous horse shelters, an equipment shop, and 25 acres, the majority of which is “pasture, tillable land”. The Appellant states that 369 Emerson Road has qualified for the Farm Property Class Tax Rate Program, while her Property has not. However, she argues that the difference in property taxes is greater than what should be reflected by the difference in tax rates for similar properties. The Appellant provided no documentary evidence to illustrate this statement.

26The Appellant also argued that she is unfairly assessed because while her purchase of the Property triggered a re-assessment, other properties have had similar improvements without the experiencing a re-assessment. The Appellant provided no documentary evidence to support this argument.

27MPAC presented its Equity Analysis Report of farm property sales which occurred between January 2012 and February 2015. Ms. Simpson expanded her search parameters until she found 30 properties for this report and included a locational map as well as the roll numbers to identify the 30 sale properties. When comparing the assessments to the time-adjusted sale values, the median assessment to sale ratio is 0.964 with a coefficient of dispersion of 18.8.

28MPAC takes the position that an equity adjustment is not required because the median assessment to sale ratio falls between 0.95 to 1.05 and the coefficient of dispersion is below 20.

Findings on Issue 2

29The goal of the Act is to determine the correct current value. Any equitable reduction in the current value results in an incorrect current value. Consequently, an equitable reduction should only be made where there is clear evidence to support that such a reduction is warranted.

30The Appellant raised important issues with regard to equitable assessment. However, I received insufficient evidence to make a meaningful comparison between the Property and 369 Emerson Road or any other property in the vicinity. With regard to 369 Emerson Road, the Appellant’s oral evidence is that it is smaller with older buildings and that it has qualified for the Farm Property Tax Rate Program. These facts support a lower assessment and a lower tax rate. Additional documentary evidence such as an appraisal or the assessment details would have been helpful. The same can be said with regard to the Appellant’s oral evidence about the other unidentified properties.

31The best evidence regarding equity is MPAC’s equity report. The level of assessment for the 30 properties indicates that an equity adjustment is not required.

32Due to the Appellant’s arguments regarding vicinity inequities, I also isolated six sales closest to the Property. In MPAC’s equity report, they are identified in the locational map and the first four roll number digits are the same as the Property, ‘1230’. Of these six properties, the median assessment to sale ratio is 1.040 and the average is 1.025. Both of these values are very near 1.00 and, therefore, indicate to me that an equity adjustment is not warranted.

CONCLUSION

33I find that the Property’s correct current value is $954,000.

34I further find that an equitable adjustment is not required.

ORDER

35The Board orders that:

1. For the 2019 taxation year the assessment is reduced from $1,060,000 to $954,000 in the Residential tax class.
2. For the 2020 taxation year the returned assessment of $954,000 in the Residential tax class is confirmed.