Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: November 02, 2020 FILE NO.: WR 166798

Assessed Person(s): Angele Marie Gagne and Roger Wilfred Gagne Appellant(s): Angele Marie Gagne and Roger Wilfred Gagne Respondent(s): Municipal Property Assessment Corporation Region 29 Respondent(s): Town of Cochrane

Property Location(s): 1138 Concession 2 & 3 Municipality(ies): Town of Cochrane Roll Number(s): 5639-020-001-08400-0000 Appeal Number(s): 3384577 and 3410894 Taxation Year(s): 2019 and 2020 Hearing Event No.: 735578

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

APPEARANCES:

Parties	Representative
Angele Marie Gagne and Roger Wilfred Gagne	Self-represented
Municipal Property Assessment Corporation	Ted Picard
Town of Cochrane	Kayla Giarad (observer)

HEARD: September 24, 2020 by telephone conference call

ADJUDICATOR(S): Joanne Laws, Member

DECISION

OVERVIEW

1Angele Marie Gagne and Roger Wilfred Gagne (the “Appellants”) are challenging the current and equitable value of their property, located at 1138 Concession 2 & 3 (the “Subject Property”) in the Town of Cochrane. The appeals are for the 2019 and 2020 taxation years.

Background

2The Appellants state they are seeking a reasonable assessment. Their property’s assessment has increased exponentially over many years and they have challenged their assessments through Requests for Reconsideration (“RfRs”) with MPAC. They argue that preparing for their RfRs and these appeals to the Assessment Review Board (the “Board”) have been challenging, restrictive and time-consuming and argue that the ‘playing field’ is not level because MPAC has easy access to its data.

3I found the Appellants to be articulate and well-prepared for these appeals. However, they did have some misconceptions regarding how the assessment legislation is applied. I hope to address their concerns in this decision. However, it is important to note that this Board can only consider the current value and equitable value of a property. The amount of taxes paid is not within the Board’s jurisdiction, including an increase due to a municipal amalgamation.

4There are only two taxation year appeals before the Board: 2019 and 2020. However, it is helpful to review the Subject Property’s relevant assessment history to provide background for these two taxation years.

5Properties in Ontario are assessed on a four-year cycle with a valuation day occurring before each cycle begins. For example, the current assessment cycle applies to 2017 through 2020 and the valuation day is January 1, 2016.

6The Subject Property had been assessed in the Farm Property Class until 2017.

7In June 2017 MPAC issued a Property Assessment Change Notice for the 2017 taxation year. This notice addressed a “Previously Omitted Realty Assessment” for an assessed value of $288,000, indicating the classification had been changed from Farm to Residential effective January 1, 2017.

8The Parties executed Minutes of Settlement (“MOS”) allocating the entire property to the Residential Property Class and reducing the assessed to $246,000.

9On November 27, 2017 MPAC issued a Property Assessment Notice for the 2018 to 2020 taxation years in the amount of $295,000. MPAC submits that this value reflects not only the change in property class but also improvements to the Subject Property which were found during the 2017 taxation year RfR process. The changes include a three-bay insulated and heated garage with a bathroom, a small addition and a partially finished basement.

10The Appellants assumed that the MOS value would carry forward for all four years of the 2017 to 2020 assessment cycle. They also believed that the Property Assessment Notice was issued before MPAC updated its records to reflect the MOS terms. As such, they waited, expecting MPAC to correct its data. While waiting, they missed the deadline to file an RfR for the 2018 taxation year.

11In the body of the executed MOS the phased-in assessed values are forecasted for the 2017 through 2020 taxation years. It is understandable how this document would lead the Appellants to assume that the MOS value would be applied to all four years. However, the title of the MOS document, a copy of which was submitted by the Appellants, shows that, despite the forecasting of subsequent taxation years, the agreement applies only to the 2017 taxation year.

12Accordingly, I find that the MOS only applies to the 2017 taxation year. MPAC exercised its right to serve notices of assessment for the subsequent assessment years based on corrections to its data (see the description of the Subject Property, below).

13The Appellants did file a timely RfR for the 2019 taxation year and, subsequently, appealed MPAC’s RfR decision to this Board. This Board then deemed an appeal for the 2020 taxation year in accordance with s. 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”).

Areas of Agreement

14The Parties agree that the Subject Property is correctly assessed in the Residential Property Class.

Issues for the Hearing

15At issue in this proceeding is:

1. A determination of the current value of the subject property; a. What are comparable sale properties?
2. Whether an equity reduction should be made.

Result

16The Current Value is reduced from $295,000 to $259,000 in the Residential Property Class.

17An equity reduction is not required.

ANALYSIS

Description of Subject Property

18The Subject Property is 136.19 acres and is improved with a single storey residence measuring 1,499 square feet built in 1989. The basement measures 1,274 square feet, 1,059 of which is finished. The residence has two bathrooms, air-conditioning, forced air heating, a septic bed and an artesian well. MPAC has allocated a 6 out of 10 level of quality of construction to the residence.

19Due to a small addition, a new entrance built in 2014, MPAC has adjusted the year built from 1989 to 1996.

20There is one additional building, a 1,536 sq. ft. three-bay detached garage, built in 2011. It is insulated and heated and has a bathroom. MPAC has allocated 4 out of 10 level of quality to this building.

Issue 1 – What is the Current Value of the Subject Property?

Issue 1a. - What Are Comparable Sale Properties for the Determination of Current Value?

21Section 19(1) of the Act provides that the assessment of land shall be based on its current value. Section 1 of the Act defines current value 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.” Section 19.2 provides that for 2019 and 2020 taxation years the valuation day is January 1, 2016.

22Based on the above, the best evidence of current value is an arm’s length sale of the Subject Property on or near the valuation day. When no such sale has occurred, the next best evidence is sales of similar properties on or near the valuation day which are located near the Subject Property.

23MPAC is recommending a reduction in the current value from $295,000 to $259,000 for the 2019 and 2020 based on inspections of the Subject Property and a more in-depth analysis of its data.

24The Appellants argue that little has changed to the Subject Property other that what is outlined in the Subject Property’s description, above. They argue that the new garage and small addition do not justify the assessment increases between the 2008, 2012 and 2016 valuation days, that the assessed values are unreasonably high.

25It is important for the Appellants to know that each valuation day stands alone and is not related to other valuation days. The current value assessment for each year is determined by considering either a sale of the Subject Property or open market sales which have occurred near the relevant valuation day. The assessed value on a valuation day reflect the market as it existed at that point in time as well as the state and condition of the assessed property. As such, the assessed value increases between valuation days are not relevant.

26It is also important to note that I cannot make a finding of current value for any year other than the two that are before me, 2019 and 2020. I appreciate the Appellants’ frustrations regarding previous taxation years, however, none of those years have been appealed to this Board.

27The Appellants argue that their property is negatively affected by a sewage lagoon located 800 feet from their residence. The Appellants did not provide evidence of the amount the lagoon’s proximity affects the value of the Subject Property. MPAC’s representative, Ted Picard, testified he investigated this issue but found that MPAC’s data shows proximity to a sewage lagoon does not affect property values. Without additional evidence, I am unable to find that proximity to the sewage lagoon negatively affects the Subject Property’s current value.

28The Appellants submit that when they built their residence, Concession 2 & 3 was paved but has since become a gravel road. They argue that this change should reduce the value of their home. However, they presented no evidence to support a quantum value.

29Both Parties presented sales. MPAC presented six sales, two of which are for the same property, 1393 Concession 2 & 3. The Appellants presented four sales. MPAC presented time-adjustment factors to estimate the market value of the sales as of the January 1, 2016 valuation day. The Appellants did not object to the use of these factors.

30I find that the following sold property is superior to the Subject Property:

a. 1393 Concession 2 & 3. There are two sales for this property, the first occurred in September 2012 for $250,000, and the second occurred in June 2013 for $287,000. For the purpose of determining current value, I will use the sale closest to the valuation day. This property is superior to the Subject Property because the lot size is slightly larger (143 acres), the residence is larger (2,515 sq. ft.), the quality of construction is higher (6.5) and it has a fireplace. The garage is smaller (480 sq. ft.). At the hearing, the Appellants stated it also has a sunroom, a cabin in the woods and a creek. On balance, I find that this property is superior to the Subject Property and, therefore, the Subject Property’s current value would likely be less than the MPAC’s time-adjusted the sale value of $292,171.

31I find the following sold properties are similar to the Subject Property:

a. 1700 Highway 11 South. The lot size is similar to the Subject Property, the residence is larger with a newer kitchen. However, the garage (780 sq. ft.) and shed (312 sq. ft.) are smaller than the Subject Property’s detached garage. It sold in April 2015 for $268,000 with a time-adjusted sale price of $269,340. On balance, I find it is similar to the Subject Property and, therefore, the Subject Property’s current value would be similar to this property’s time-adjusted sale price.

32The remaining sold properties are, on balance, inferior to the Subject Property:

a. 160 Malherbe Road. This residence is similar to the Subject Property in size (1,507 sq. ft.), quality of construction (6), number of bathrooms (2) and it is a single storey. However, the lot is significantly smaller (14.58 acres) and it has a smaller and older garage (890 sq. ft. built in 1994). At the hearing the Appellants testified that the residence had major renovations after a fire; MPAC has adjusted the date built from 1983 to an effective year built of 2004 to reflect the renovations. This property sold in December 2016 for $228,000 with a time-adjusted sale value is $226,662. MPAC argues that despite the renovations to the residence, it is inferior because the quality and finishes the Subject Property’s detached garage add significant value. I agree with MPAC and find that the Subject Property is, on balance, superior to this this property and, therefore, its current value would be higher than this property’s time-adjusted sale price.

b. 354 Concession 8 & 9: The residence is similar than the Subject Property in quality of construction (6), number of bathrooms (1.5) and it is a single storey. It is also similar in lot size (148 acres). However, the residence is smaller (1,098 sq. ft.). At the time of the sale it had a smaller and older detached garage (1,056 sq. ft. built in 1980) and a barn (759 sq. ft. built in 1973). Both of these outbuildings were demolished and replaced after the sale. At the hearing the Appellants testified that this property was also renovated after a fire; MPAC has adjusted the date built from 1987 to an effective year built of 2005 to reflect the renovations. The Appellants also testified that this property has a small lake. Based on this property’s state and condition at the time of the sale, I find that, on balance, it is inferior to the subject property, placing more weight on the size of the residence and the size and age of the outbuildings as significant factors on value. This property sold in December 2014 for $225,000 with a time adjusted sale value of $226,694. Accordingly, the Subject Property’s current value would be higher.

c. 482 Nahma Road: The residence is similar in size (1,386 sq. ft.), it is a single storey with two bathrooms. There is a small shed, built in 1993 with 288 sq. ft. However, the residence is older (1968) with a 5 out of 10 quality of construction, the lot is smaller (80.25 acres) and, there is a detached garage, but it is smaller and older (384 sq. ft., 1968). This property sold in June 2016 for $200,000 with a time-adjusted sale value of $199,294. Based on the above data, I find that the Subject Property is superior and, therefore, would have a higher current value.

d. 753 Concession 2 & 3: The residence is a similar age (1999), quality of construction (6), it is a single storey with two bathrooms. However, it does not have a garage, the residence is smaller (1,255 sq. ft.) and the lot size is significantly smaller (2 acres). This property sold in August 2013 for $185,000 with a time-adjusted sale value of $188,183. Based on the above data, I find that the Subject Property is superior and, therefore, would have a higher current value.

e. 1232 Concession 2 & 3: The residence is similar in size (1,238 sq. ft.) and it is a single storey. However, the residence is older (1974), the lot is smaller (1.84 acres) and the detached garage is smaller (the photographic evidence shows a single door garage with a small overhang on one side). This property sold in January 2014 for $140,000. Using MPAC’s time-adjustment factors, the adjusted sale value is $141,960. Based on the above data, I find that the Subject Property is superior and, therefore, would have a higher current value.

f. 1821 Highway 652. The lot size and residence size are similar to the Subject Property, but the residence is newer. The Appellant states that there are “two large detached garages” but provided no measurements or other details (such as heating and whether they have bathrooms). Without additional data, I cannot find that this property is similar or superior to the Subject Property.

Findings on Current Value

33Based on the above, the Subject Property’s current value ought to be at or close to $269,000 which is the time-adjusted sale value of the most comparable property. However, the current value ought to also fall in the range of $226,694 (the highest of the inferior property sales) and $292,171 (the superior property sale). Because there is only one similar property, I place more weight on the range of values and find that MPAC’s recommended current value of $259,000 is the correct current value because it falls at the mid-point of that range. Accordingly, the current value of the Subject Property is $259,000.

Issue 2 – 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#sec44subsec3_smooth) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html)?

34Clause 44(3)(b) of the Act provides that, in determining whether an adjustment of the current value is required to make it equitable, I must “have reference to the value at which similar lands in the vicinity are assessed”. The word “similar” is not defined in the Act.

35In Municipal Property Assessment Corporation v Loblaw Properties Limited, 2017 ONSC 1299, the Divisional Court contemplated the meaning of ‘similar lands’ in relation to clause 44(3)(b) of the Act. Referencing Trizec Equities Ltd. V. Ontario (Regional Assessment Commissioner, Region No. 27), [1988] O.J. No. 182, 27 O.A.C. 203, 37 M.P.L.R. 175, 8 A.C.W.S. (3d) 399 (“Trizec”) the Court found, at paragraph 25, that “the proper approach to be taken to determining what are ‘similar lands in the vicinity’ is that set out by Saunders J. in Trizec, that is, that all points of comparison must be considered”. In Trizec, the Court also determined that: “The Board must make a factual finding based on such a consideration. One point of similarity such as use may be, but is not necessarily, determinative. Some similarities may be overridden by other characteristics and some differences may be subordinated.”

36The evidence is that the Subject Property was mistakenly assessed in the Farm Property Class and that the error was corrected in 2017 when MPAC re-assessed it wholly in the Residential Property Class.

37In this instance, the primary characteristic is property class because different property classes transact differently in the market. For example, only farm sales from one farmer to another remain in the Farm Property Class and only residential sales are used to assess properties in the Residential Property Class. Accordingly, the most comparable and appropriate sale properties for determining the Subject Property’s current value are those in the Residential Property class because they will transact in the marketplace in the same manner as the Subject Property.

38The Appellants submitted three properties they considered comparable to the Subject Property: 1013 Concession 2 & 3 (“1013”), 419 Génier Road and 480 Génier Road (“480”). All were assessed in the Farm Property Class. MPAC has since re-assessed these properties. 1013 and 480 were re-assessed in the Residential Property Class, each at $240,000. 419 Génier Road was also reassessed but it remained in the Farm Property Class. Accordingly, I will only consider 1013 and 480 in my equity analysis.

39There are different methods of considering the issue of equity. The most common is comparing the assessments to sales, known as an ‘assessment to sale ratio’. However, comparing assessments alone can also be informative. Neither 1013 or 480 have sales. MPAC’s evidence is that both were assessed at $240,000. Comparing the Subject Property to these two properties I note the following:

a. 1013 has a smaller lot (16 acres compared to the Subject Property’s 136 acres), an older residence (1955 compared to the Subject Property’s 1989) and a smaller residence (972 sq. ft. compared to the Subject Property’s 1319 sq. ft.) Based on these differences, it is reasonable that the Subject Property has a higher assessed value.

b. 480 also has a smaller lot (78 acres), a slightly older residence (1981) and a slightly smaller residence (1,244 sq. ft.) Based on these differences, it is reasonable that the Subject Property has a higher assessment.

40The Appellants also compared the assessment and sale values of the five sale properties in MPAC’s current value analysis. This data is set out in the following chart. An analysis of this data shows a median assessment to sale ratio of 0.99 and a mean of 1.04, both of which are very close to 1.00. Based on these results, an equitable adjustment to the current value is not required.

Address	Assessment	Time Adjusted Sale Price	Assessment to Sale Ratio
1393 Concession 2 & 3	$285,000	$292,171	0.98
160 Malherbe Road	$258,000	$226,662	1.14
354 Concession 8 & 9	$253,000	$226,694	1.12
482 Nahma Road	$193,000	$199,294	0.97
753 Concession 2 & 3	$186,000	$188,183	0.99

Median 0.99 Mean 1.04

41MPAC presented an Equity Analysis Report which included an assessment to sale ratio analysis of 30 single-family detached residential property sales. The sales occurred between 2012 and 2017, have quality classes between 5.0 and 6.5 and are located in the vicinity of the Subject Property. When comparing the assessments to the time-adjusted sale values, the median assessment to sale ratio is 0.97 with a coefficient of dispersion of 15.2. MPAC takes the position that an assessment to sale ratio falling between 0.95 and 1.05 with a coefficient of dispersion below 20 for rural properties indicates that similar properties in the vicinity of the Subject Property have been assessed at or near their current values and, therefore, an equity adjustment is not required.

Finding on Whether an Equity Adjustment is Required

42The Parties’ evidence consistently shows that an equity adjustment is not required. The best evidence is MPAC’s Equity Analysis Report because the points of comparison are sufficient and the sample size is large enough to determine a trend. Based on an ASR of 0.97, which is very close to 1.00, and a coefficient of 15.2, I find that an equity adjustment is not required.

CONCLUSION

43I find that the current value of the Subject Property is $259,000 in the Residential Property Class. I also find that no adjustment for equity is required.

ORDER

44The Board orders that the assessment is reduced from $295,000 to $259,000 in the Residential Property Class for the 2019 and 2020 taxation years.