Heinz Schoppmann v. Municipal Property Assessment Corporation Region 30, 2020 CanLII 57369

Assessment Review Board / Commission de révision de l’évaluation foncière

ISSUE DATE: August 10, 2020 FILE NO.: WR 165142

Assessed Person(s): Heinz Schoppmann and Paul Fritz Schoppmann Appellant(s): Heinz Schoppmann Respondent(s): Municipal Property Assessment Corporation Region 30 Respondent(s): Town of St-Charles

Property Location(s): 813 Beauparlant Road Municipality(ies): Town of St-Charles Roll Number(s): 5204-000-003-12800-0000 Appeal Number(s): 3392324, 3394261, 3394262 and 3411088 Taxation Year(s): 2018, 2019 and 2020 Hearing Event No.: 731167

Legislative Authority: Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties	Representative
Heinz Schoppmann	Self-represented
Municipal Property Assessment Corporation	Marc Serré
Town of St-Charles	No one appeared

HEARD: June 3, 2020 by telephone conference call

ADJUDICATOR(S): Joanne Laws, Member

DECISION

OVERVIEW

1Paul Fritz Schoppmann and Heinz Schoppmann (the “Appellants”) are the owners of the Subject Property, located at 813 Beauparlant Road which is assessed as a farm property. Heinz Schoppmann improved the property with a residential building which was occupied effective January 1, 2018.

[2] The parties agree that:

• the Subject Property is farm land used for farm purposes; and
• the residence is a new build first occupied in 2018.

[3] For the 2018 taxation year the Municipal Property Assessment Corporation (“MPAC”) returned the following assessments with respect to this property:

• A general assessment of $319,000 in the Farm Property Class.
• A supplemental assessment, pursuant to s.34 of the Act, of $1,700 effective January 1, 2018 in the Farm Property Class, representing one acre of land to be removed from the farm portion and allocated to the new residence. MPAC takes the position that the land classification should change from the Farm Property Class to the Residential Property Class.
• A supplemental assessment, pursuant to s. 34 of the Act, of $537,000 in the Residential Property Class, effective January 1, 2018, to reflect the value of a newly built residence.

4MPAC returned a general assessment of $856,000, rounded, for the 2019 taxation year with $317,300 for farm land and a farm building and $538,700 for the residence and one acre of land.

5MPAC returned a general assessment of $834,000, rounded, for the 2020 taxation year with $317,300 for farm land and a farm building and $516,700 for the residence and one acre of land.

6The Appellants have appealed both of the 2018 supplementary assessments pursuant to s. 34 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) because they believe the values are too high. Pursuant to s. 40(26) of the Act, the Appellants are deemed to have brought assessment appeals for the subsequent 2019 and 2020 tax years.

7It is the Appellants’ position that the total correct current value should be between $650,000 and $700,000.

[8] At the hearing MPAC took the position that:

• the 2018 supplementary assessment of $1,700 for one acre in the Farm Property Class should be re-allocated to the Residential Property Class, and that the correct value of that acre should be $1,914;
• the 2018 supplementary assessment of $537,000 for the residence should be reduced to $406,000 to reflect that its construction was 75% complete for 2018;
• for the 2019 and 2020 tax years the value of the residence plus one acre of land should be reduced from $538,700 to $516,700 for a total current value of $834,000 ($516,700 for the residence and one acre of land plus $317,300 for the farm and a farm building).

9Pursuant to s. 40(11) of the Act, the Town of St-Charles (“Municipality”) is a party to this proceeding. However, no one appeared on its behalf.

Issues for the Hearing

[10] At issue in this proceeding is:

1. a determination of the current value;
2. a determination of the current values for the supplementary assessments;
3. whether an equity reduction in the current value should be made.

Result

[11] At the completion of the hearing, I reserved my decision. For the reasons that follow, I find that:

• The supplementary assessment, effective January 1, 2018, for the one acre land is confirmed at $1,700 and is allocated to the Residential portion of the assessment;
• The supplementary assessment, effective January 1, 2018, for the residence is reduced from $537,000 to $406,000 in the Residential Class;
• The total current value for the 2019 and 2020 taxation years is $834,000 allocated as follows: i. $317,300, rounded, in the Farm Property Class. ii. $516,700, rounded, in the Residential Property Class.

ANALYSIS

Description of Subject Property

12The Subject Property is classified as farm land with a total of 168 acres of land. At the hearing, Marc Serré of MPAC testified that of the 168 acres, 80 acres are Class 3 farm land, one acre of which is allocated to the residence, and 88 acres are Class 6 farm land. He described the Class 3 farm land as having moderate to severe farming limitations and the Class 6 farm land as unusable or pasture land.

13Initially, the Subject Property had only one structure which MPAC assessed as farm building. It has a total floor area of 6,050 square feet (“sq. ft.”), with 5,000 sq. ft. used as a garage for storing farm equipment and 1,050 sq. ft. for residential use. The structure is insulated with reinforced and heated concrete floors and has metal siding and roof. The first floor has 3,950 sq. ft. with 16-foot ceilings and an additional 1,050 sq. ft. with 8-foot ceilings. Above the main floor 8-foot ceiling area is a two-bedroom, one-bathroom residential apartment. The parties agree that the residential portion has been vacant for the assessment years under appeal. Mr. Serré submits that MPAC has classified this building as an insulated barn but that it could be assessed at a higher value if all finishes and uses were taken into consideration.

14As of January 1, 2018, MPAC has assessed a newly constructed 3,380 sq. ft. single-storey residence. Mr. Serré, who inspected the Subject Property on March 1, 2020, describes the residence as having higher than average finishes in relation to residential buildings in the area, including a poured insulated concrete form (ICF) foundation, heated floors and 9-foot ceilings in the basement.

Issues 1 and 2 - What is the current value of the Subject Property?

15Pursuant to the provisions of the Act, the assessment of land shall be based on its current value. The Act also provides that for the years under appeal the valuation day is January 1, 2016.

16Current value means, in relation to land, the amount of money the fee simple, if unencumbered, would sell for in an arm’s length transaction between a willing seller and a willing buyer. When determining the current value of farm land, s. 19(5) of the Act further provides that only sales of farm land to farmers intent on farming can be considered.

Cost Approach to Value

17MPAC assesses farms using the cost approach to value. This method of valuing property considers the cost of replacing the existing improvements, less negative influences such as depreciation and obsolescence. The total value of a property is determined by adding the net value of the improvements to the land value. Mr. Serré submits that MPAC’s assessment of farms using the cost approach is appropriate, particularly in this instance, due to the scarcity of comparable farm sales.

18Using the cost approach to value, and following the review of the Appellants’ Request for Reconsideration, an inspection of the Subject Property and amendments to the property’s data, Mr. Serré states that the Subject Property’s correct current value is:

• $726,000, rounded, for the 2018 taxation year, allocated as follows: i. Residential building $406,557 ii. Farm building $131,231 Total Improvements $537,788 i. Residential land $1,700 ii. Farm land $186,533 Total Land $188,233

• $834,000, rounded, for the 2019 and 2020 taxation years, allocated as follows: i. Residential building $514,973 ii. Farm building $131,231 (remains unchanged) Total Improvements $646,204 i. Residential land $1,914 ii. Farm land $186,533 (remains unchanged) Total Land $188,447

19Mr. Serré submits that the change in values for the residence reflects an adjustment to the basement data and, a 75% state of completion for 2018, and, a 95% completion for 2019 and 2020.

Sales Comparison Approach

20Another method of valuing property is the sales approach, also known as the direct comparison approach, which utilizes the sale values of comparable properties.

21The parties agree that there are few farm sales in the vicinity of the Subject Property and no sales of directly comparable properties. However, to support the value obtained by the cost approach, MPAC presented three farm sales and four residential sales. In addition, the Appellants presented one farm sale, 906 Dupuis Road. These four farm sales are summarized in Table 1 below. Only the first and fourth sales are located in the same municipality as the Subject Property.

22Using the bracketing approach MPAC argues that, of its three sales, 1031 Turcot Road is similar to the Subject Property, 279 Millrand Road is inferior to the Subject Property and 3151 Highway 64 is inferior to the Subject Property. MPAC argues that its three farm sales, while not directly comparable to the Subject Property, indicate that there is a market for higher values in the area and that MPAC`s recommended values are reasonable.

23The Appellants argue that the sale of 906 Dupuis Road, which has a similar number of acres with similar farm land classes, supports a reduced current value.

Table 1, Sales for Determining the Current Value

Feature	Subject Property	1031 Turcot Road	279 Millrand Road	3151 Highway 64	906 Dupuis Road
Sale Price and Sale Date	N/A	$1,117,750 April 2015	$675,000 December 2013	$810,000 July 2016	$329,000 November 2012
Time Adjusted Sale Price	N/A	$1,167,338	$763,671	$785,529	N/A
Assessed Value	$834,000	$1,316,000	$537,000	$639,000	$317,000
Number of Acres	168	645	375	475	158
Farm Land Classes (acres)	Class 3: 80 Class 6: 88	Class 1: 258.5 Class 6: 386.44	Class 1: 150 Class 2: 70 Class 6: 154.26	Class 3: 50 Class 4: 194 Class 5: 122 Class 6: 109	Class 4: 53 Class 6: 80
Residence Age and Size	2018 3,380 sq. ft.	1966/1976 1,500 sq. ft	1913/1949 2,3354 sq. ft.	1935/1940 3,168 sq. ft.	a) House: 1956/0966 1,008 sq. ft. b) Mobile Home: 1980 920 sq. ft.
MPAC’s Quality of Construction	6.5	6	5	6	5
Basement Area	2,047 sq. ft.	1,500 sq. ft.	1,167 sq. ft.	1,584 sq. ft	0
Basement Height in Feet	9	7.5	8	6.5	N/A
Farm Structures (and year built)	1) 1,050 sq. ft. Interior Stripper Room 2) 5,000 sq. ft. insulated barn with residential apartment	1) Six Un-insulated Barns ranging from 576 to 6,636 sq. ft., (1932, ’64, ’74, and three in ’81) 2) One Feed Tank (1984) 3) One Quonset, 2,301 sq. ft., (1969). 4) Two Tanks, 2,896 and 4,356 sq. ft. (1974 & ’81) 5) Four Silos (1956, ’69, ’75 & ’84) 6) One Pre-fab metal building, 4,800 sq. ft. (1984) 7) One Grain Bin, (1981)	1) Five Un-insulated Barns ranging from 352 to 3,278 sq. ft., (1913 to 1975) 2) One Milk House, 230 sq. ft., (1950)	1) Two Un-insulated Barns, 768 and 5,000 sq. ft., (2011) 2) One Silo, (1973)	1) Milk House 2) Four small barns
Number of Farms Included in the Sale	N/A	4	1	5	4

24In support of the residence’s assessed values, Mr. Serré submitted six residential sales that are not located on farms and are not classified as farm land. While he submitted these sales to support his position that higher values for residences are possible, I do not find these sales to be of assistance in determining the Subject Property’s current value pursuant to s. 19(5) of the Act. They are not located on farm land, and they were not sold by a farmer to a farmer intent on farming.

25The Appellants argue that farm properties are not selling in the vicinity for their residences, but for cash crop farming. They argue that the Subject Property’s residence is overbuilt for the market, that dairy farming has all but ceased in the area, and, as such, they would not realize the assessed value for the Subject Property’s residential portion. However, on cross-examination Mr. Schoppmann testified he had obtained an opinion of value from a real estate professional but did not submit it into evidence because the value was, in his opinion, too high. The Appellants argue that properties that sold for less than their assessment are superior in terms of acreage and farm buildings and that the Subject Property’s current value should be between $650,000 and $700,000.

Findings on Current Value

26Based on the evidence received, I find that the direct sales comparison approach is the best approach to determine the current value of the Subject Property because it considers what similar properties in the area sold for.

27The main issue in applying the direct sales comparison approach is the degree of comparability of the properties. To assist in the determination of current value I will employ bracketing. Bracketing is based on the general principles that comparable properties that are superior will sell for higher values, similar properties will sell for similar values and inferior properties will sell for lower values. It is a good method of comparing properties when there is a lack of directly comparable sale properties, as is the case here.

Supplementary Assessments for 2018

28In regard to the supplementary assessment for the one acre of land attributable to the residence, I note that MPAC has amended its value from $1,700, as returned, to $1,914 to reflect MPAC’s assessed rate per acre for Soil Class 3. The Appellants presented no evidence or arguments regarding the size or value of the land attributable to the residence. The Board has not received a notice of intention to seek a higher assessment which is required by Rule 40 of the Board’s Rules of Practice and Procedure. Given this absence of notice, I confirm the one acre of land attributable to the residence at $1,700 for 2018. I further find that the correct property class for this single acre is Residential.

29With regard to the supplementary assessment for the residence, I accept the parties’ evidence that the residence was incomplete, and, the parties agree that the residence is over-built for the area. However, I received no evidence from the Appellants that would lead me to a specific value for the residence. I give little weight to the Appellants’ argument that residences hold little value in the area. It is reasonable to conclude that this particular residence, with its superior quality and newer build date, will have value in the market.

30The best evidence I received for the supplementary value for the new residence is MPAC’s Cost Approach to Valuation. Accordingly, the supplementary assessed value of the residence building is reduced from $537,000 to $406,557.

[31] Therefore, for the 2018 taxation year, the total assessed value is $726,000, rounded, allocated as follows:

• Farm: $131,200, rounded, for the farm building and $186,500 for the farm land.
• Residential: $406,500, rounded, for the residence plus $1,700 for the one acre of land attributable to the residence.

Current Value for 2019 and 2020

32The next step is to determine the current value of the Subject Property for the 2019 and 2020 taxation years.

33MPAC’s three farm sales are significantly larger than the Subject Property but they have older and smaller residences.

34I find that the sale of 1031 Turcot Road, which is a combined sale of five land parcels, is superior to the Subject Property. It has more farm land, the soil class is a higher quality, and, there are far more farm buildings. Accordingly, the Subject Property would sell for less that the time adjusted sale value of $1,167,338.

35I find that 279 Millrand Road is, on balance, inferior to the Subject Property. It has more farm land and the soil class is higher. However, the residence is older, smaller and of lower quality and the farm buildings are older and of lower quality. Accordingly, the Subject Property would sell for more than 279 Millrand Road’s time adjusted sale price of $763,671.

36I find that 3151 Highway 64 is also inferior to the Subject Property. It has more farm land than the Subject Property, but the overall quality is lower. The residence is similar in size to the Subject Property’s and it has relatively new farm buildings, one of which is a 5,000 sq. ft. barn. However, the buildings are older. Accordingly, the Subject Property would sell for more than $785,529.

37The Appellants’ sale at 906 Dupuis Road is made up of four land parcels. The total number of acres is slightly smaller than the Subject Property and the soil class is lower. The residences and farm buildings are significantly inferior. I find that the Subject Property would sell for more than this property’s sale value of $329,000.

38I find that the above sales support MPAC’s recommended values. Therefore, I find that the current values for the Subject Property are $726,000 for the 2018 taxation year, which reflects a 25% reduction for the unfinished residence, and, $834,000 for 2019 and 2020 taxation years.

[39] Therefore, for 2019 and 2020 I find that the total assessed value is $834,000, rounded, allocated as follows:

• Farm: $317,700 with $131,200, rounded, for the farm building and $186,500 for the farm land.
• Residential: $516,400, rounded, with $514,500, rounded, for the residence plus $1,900, rounded, for the one acre of land attributable to the residence.

Issue 3 – Is an equitable adjustment of the current value required pursuant to [section 44(3)(b)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html)?

40Mr. Schoppmann argued that the Subject Property is assessed higher than other farm properties in the vicinity. He argued that prospective purchasers are not looking for homes, but for land to grow cash crops, and that dairy farming (which is appropriate for his 88 acres of Class 6 farm land) has all but ceased in the area. He presented the assessments of six farm properties with assessments ranging from $266,000 to $676,000.

41MPAC presented its Equity Analysis Report which included a level of assessment analysis (comparing the assessments to the sale values) of 20 farm property sales. The sales occurred between January 2010 and December 2017. When comparing the assessments to the time-adjusted sale values, the median assessment to sale ratio is 0.973 with a coefficient of dispersion of 15.97.

42MPAC takes the position that an equity adjustment is not required because the median assessment to sale ratio falls between 0.95 and 1.05 and the coefficient of dispersion is below 20.

Findings on Equity

43Mr. Schoppmann raised important issues with regard to equitable assessment. However, his evidence does not lead me to conclude that the Subject Property’s assessment is inequitable.

44In reviewing the Appellants’ six assessments, I find that they are similar to the Subject Property for the purpose of considering equity because they are all located in the vicinity of the Subject Property and are used for farming.

45The first assessment applies to a single roll number for 162 acres at 1031 Turcot Road. This same address was presented as a sale in MPAC’s evidence however MPAC’s sale contained 645 acres with five roll numbers. The Appellants’ evidence shows that the 162-acre parcel is comprised of 84 acres of Class 1 farm land and 78 acres of Class 6 farm land and that it has most if not all of the farm buildings. It was assessed at $652,000. Based on the number of buildings and the superior quality of the farm lands, it is, on balance, similar to the Subject Property.

46The remaining five properties have older, smaller and poorer quality residences, with less farm lands and/or overall lower quality farm lands. These factors support their lower assessments.

47While the evidence for 1031 Turcot Road suggests that that particular assessment may be too low, overall, the six assessments presented by the Appellants do not show a trend indicating that MPAC is over or under-assessing similar lands in the vicinity of the Subject Property.

48The 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.

ORDER AND CONCLUSION

49The supplementary assessment, effective January 1, 2018, for the one acre of land allocated to the residence is confirmed at $1,700 in the Residential Tax Class.

50The supplementary assessment, effective January 1, 2018, for the residence is reduced from $537,000 to $406,000 in the Residential Tax Class.

[51] The total current value for the 2019 and 2020 taxation years is $834,000 allocated as follows: i. $317,300 in the Farm Property Class; and ii. $516,700, rounded in the Residential Property Class

52No adjustments are required for the purpose of equity.