Tribunals Ontario
Tribunaux décisionnels Ontario
Assessment Review Board
Commission de révision de l’évaluation foncière
ISSUE DATE:
December 23, 2021
FILE NO.:
WR 175242
Assessed Person(s):
Pauline Marleau; Richard Marleau
Appellant(s):
Pauline Marleau; Richard Marleau
Respondent(s):
Municipal Property Assessment Corporation Region 28
Respondent(s):
Municipality of West Nipissing
Property Location(s):
336 Marleau Road
Municipality(ies):
Municipality of West Nipissing
Roll Number(s):
4852-040-001-22100-0000
Appeal Number(s):
3393874, 3410777 and 3448932
Taxation Year(s):
2019, 2020, 2021
Hearing Event No.:
756076
Legislative Authority:
Section 40 of the Assessment Act, R.S.O. 1990, c. A.31
APPEARANCES:
Parties
Representative
Richard Marleau and Pauline Marleau
Self-represented
Municipal Property Assessment Corporation
Pamela Hawkins and Mia Cyr
Municipality of West Nipissing
No one appeared
HEARD:
November 9, 2021 by telephone conference call
ADJUDICATOR(S):
Pierre R. Lavigne, Member
DECISION
OVERVIEW
1Pauline and Richard Marleau (the “Appellants”) appeal the assessment of current value of a 2019 newly built one-storey single-family dwelling on the shore of Lake Nipissing. The appeal requires a determination of the vacant lot value before building and a determination of the subject property as built.
Background
2The Appellants appealed their current value assessment for the 2019 taxation year pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) because the value was too high, therefore incorrect. Pursuant to s. 40(26) of the Act, the Appellants are deemed to have brought the same appeal for subsequent years. Accordingly, this decision applies to the assessments of current value for the taxation years 2019 to and including 2021.
3The assessment for the vacant lot for the 2019 taxation year was $107,000. The assessment for the subject property, as built, for the 2020 and 2021 taxation years was $354,000. The Municipal Property Assessment Corporation’s (“MPAC”) opinion of current value for the as-built property was $316,000. The Appellants’ position is that the current value should be assessed at $225,000.
Issues for the Hearing
4At issue in this proceeding is:
- The determination of the current value of the subject property:
a. What was the value of the vacant lot for the 2019 taxation year?
b. What was the value of the property, as built, for the 2020 and 2021 taxation years?
i. What is the appropriate valuation approach?
Result
5The Assessment Review Board (the “Board”) finds that the correct January 1, 2016 current value of the subject property for the 2019 taxation year is $100,000.
6The Board finds that the correct January 1, 2016 current value of the subject property for the 2020 and 2021 taxation years is $300,000.
7The Board finds that no adjustment for equity is required pursuant to s. 44(3)(b) of the Act.
ANALYSIS
Description of Subject Property
8The property is a 1.12-acre lot on the northern shore of Dutrisac Bay area of Lake Nipissing. On this lot, a 1,294 square feet (“sq. ft.”) one-storey, two bedroom, single-family home was built in 2019.
Governing Statutory Provisions
9Section 19.2 of the Act stipulates that January 1, 2016 is the day as of which the current value of the land shall be determined for the 2017 to 2020 taxation years. Section 48.6 of the General Regulation O. Reg. 282/98 applies this valuation day to the 2021 and 2022 taxation years.
10Section 40(17) of the Act places the burden of proof as to the correctness of the current value upon MPAC.
11Section 44(3)(b) of the Act requires the Board to reduce the assessment if that value is inequitable when compared to the assessment of similar lands in the vicinity.
State and Condition Date
12Annual assessments are based on the state and condition of the land, on the assessment roll return date, in the December immediately preceding any given taxation year. This is referred to as that taxation year’s state and condition date (see Non-Profit Seniors Housing of Kenora v Municipal Property Assessment Corporation, Region 32, 2015 CanLII 58800 (ON ARB) at para. 9-12).
Issue 1 – The determination of the current value of the subject property
a. What was the current value of the vacant lot for the 2019 taxation year?
13In the December preceding the 2019 taxation year the lot was vacant. In light of the legislated valuation day, the question is what this vacant lot would have been worth on January 1, 2016.
14Pamela Hawkins, a valuation analyst with MPAC gave evidence that the subject property sold in a sale between family members on December 6, 2013 for $97,500. She testified that she was of the opinion that even if it was a sale between family members she thought it was a fair sale, close to market value, but at the low end of the range of reasonable values. She also testified that there had not been much movement in prices from end of 2013 to the valuation day. The time adjustment factor was according to her evidence 1.007, producing a time adjusted value of $98,183. She had also taken into consideration the fact that the western part of the lot was adversely affected by a drainage ditch and that the effective usable frontage on the lake had been reduced from 217 ft to 75 feet. The effective usable lot area had also been reduced from 1.12 acres to 0.89 acres. She presented no evidence of comparable sales of vacant lots.
15The appellant Mr. Marleau, for the Appellants testified that he felt he had paid above market to keep the property in the family. Though in his opinion Mr. Marleau paid more than market value, he has provided no evidence of what that market value was so that the Board could determine if he did in fact pay over market as he states.
16Ms. Hawkins is familiar with sales in this market because of her position with MPAC. On the basis of this knowledge she concluded that the sale price was within the fair and reasonable range of values for this lot, though at the low end.
17Though she presented no evidence of sales of comparable lots, the Board prefers the evidence of Ms. Hawkins because of her occupational knowledge. Mr. Marleau also presented no evidence of comparable sales. He did not testify to any experience with the real estate market. As a party to the sale between family members while his evidence may be evidence of his motivations, it is not evidence of the market. In light of Ms. Hawkins’ time adjusted value and her opinion that the sale price was at the low end of a fair and reasonable range of values, the Board finds the January 1, 2016 current value of the vacant lot to be $100,000.
b. What was the value of the property, as built, for the 2020 and 2021 taxation years?
18At the December 2019 assessment roll return date for the 2020 taxation year the lot was no longer vacant. The house had been built. In light of the legislated valuation day, the question is what would this as-built subject property have been worth on January 1, 2016?
Evidence of MPAC
19Ms. Hawkins gave evidence that the subject property, with the newly built structure, had a value of $316,000. She derived this opinion by analyzing sales of comparable properties which occurred at or near the valuation day of January 1, 2016. Those sales, as well as the subject property, are described in the following table:
MPAC’s Comparable Property Sales
Subject Property
Property #1
Property #2
Property #3
Property #4
Property #5
Roll Number
485204000122100
485204000101410
48520600Cl124800
48520600Cl123500
485204000222200
485204000221218
Address
336 MARLEAU RD
32 MAURICE RD
243 AVENUE DU LAC
323 AVENUE DU LAC
996 EVANSVILLE DR
1048EVANSVILLE DR
Neighbourhood
Wl0-600
Wl0-600
W16-603
W16-603
W04-208
W04- 208
Property Code & Desc.
(313) Single Family Detached On Water
(313) Single Family Detached On Water
(313) Single Family Detached On Water
(313) Single Family Detached On Water
(313) Single Family Detached On Water
(313) Single Family Detached On Water
Distance in km
2.8572
17.6078
16.9262
6.2454
5.8833
Valuation
Current Value Assessment
$354,000
$377,000
$360,000
$383,000
$308,000
$289,000
Sale Date
20130802
20160420
20170601
20170202
20160401
Sale Amount
$365,000
$338,500
$455,000
$390,000
$379,000
Time Adjusted Sale Amount
$365,184
$335,885
$430,884
$375,255
$376,072
Site
Effective Frontage (F)
75
112
100
160
150.99
94
Actual Frontage
217.2
112
100
160
150.99
94
Effective Depth (F)
516.04
377.26
151.42
328.85
269
258.63
Actual Depth
377.26
151.42
328.85
269
258.63
Effective Site Area (Acres)
0.89
0.97
0.37
1.11
0.96
0.43
Actual Site Area (Acres)
1.12
0.97
0.37
1.11
0.96
0.43
Subject Property
Property #1
Property #2
Property #3
Property #4
Property #5
Residential Structure
Year Built
2019
2003
1991
2004
2004
2014
Quality of Construction
6.5
6
6
6
6
6.5
Baths
1.5
1.5
2
2
2
2.5
Heating Type
Forced Air
Electric (Baseboard, Wall insert)
Electric (Baseboard, Wall insert)
Forced Air
In Floor Radiant (Coils)
Forced Air
Building Total Area (SF)
1.294
1,355
1,412
1,260
1,746
1,117
Building Area (SF)
1,294
1,355
1,380
1,746
1,117
Finished Basement Area (SF)
949
[1]
20Ms. Hawkins indicated that Sales 1, 2 and 3 have waterfrontage on Lake Nipissing, while Sales 4 and 5, though also waterfront properties, front on the Sturgeon River and are qualitatively inferior locations, because “properties on the open lake have a slightly greater value than river properties.” This evidence was not contested.
21She testified that her opinion of value was derived from the median actual sale price per square foot of the buildings in Sales 1, 2, and 3 which she calculated at $244.00 per sq. ft. Applying this value to the 1,294 sq. ft. of the subject property produced a value of $315,736, rounded to $316,000.
Evidence of the Appellants
22Mr. Marleau did not base his submissions on the value of comparable sales at or near the valuation day. Rather, he relied on the current value assessments of seven properties he judged comparable and which were all closer to the subject property, all on the same street in fact. He subtracted his estimate of the value or adjustments to arrive at an average value of $175 per sq. ft of adjusted assessment. He applied this figure to the area of his house to produce a value of $226,450, rounded to $225,000.
23In response to the Board’s questions Ms. Hawkins was able to provide sale prices for some of the assessment comparables used by Mr. Marleau where sales were within five years of the valuation day. Those sale values together with Ms. Hawkins’ uncontested time adjustment and derived calculations are as follows:
Appellant comparable
Address
Sale date
Sale price
Time Adjust. factor
Adjusted Sale Price
2016 Assessment
Year built
sq. ft.
s.p /sq. ft.
1
376 Marleau
May-17
395,000
0.951
375,645
360,000
1986
1156
341.70
3
352 Marleau
May-13
200,000
0.994
198,800
250,000
1962
1600
125.00
4
348 Marleau
Jul-19
249,000
unavail.
229,000
1965
1237
201.29
6
326 Marleau
May-19
420,000
unavail.
321,000
1972
2064
203.49
24Mr. Marleau testified in cross-examination that though he did not have the actual cost of constructing the house in 2019 the building permit was for $200,000.
a. Appropriate valuation approach
25The Board was unable to reproduce Ms. Hawkins $244 per sq. ft., from the evidence supplied of her comparable Sales 1, 2 and 3.
a) Sale 1 was for a 1,355 sq. ft., building at $365,000 for a sq. ft. value of $269.37 or $269.50 using the time adjusted sale price;
b) Sale 2 was for a 1,412 sq. ft., building at $338,500 for a sq. ft. value of $239.73 or $237.90 using the time adjusted sale price;
c) Sale 3 was for a 1,260 sq. ft., building at $455,000 for a sq. ft. value of $361.11 or $342.00 using the time adjusted sale price;
26The median of these sales was Sale 2 at $269.37 which applied to the 1,294 sq. ft. of the subject property would produce a value of $348,564 or $349,000 rounded.
27Mr. Marleau’s $225,000 estimate of value was derived from assessed values. Assessed values are not a valid indication of current value. They are not evidence of sale prices at or near the valuation day. Assessment values are sometimes in error. That is the very basis of this appeal. If assessment values were always correct there would be no need for appeals or equity adjustments. Correct current values are derived from recognized approaches to value such as comparing actual sales at or near the valuation day or using the income approach for income producing properties or the cost approach when appropriate.
28Mr. Marleau’s comparables, when factoring in sale prices provided by Ms. Hawkins, ranged from $125 to $341 per sq. ft.
29The sq. ft values of all sales submitted as comparable by Ms. Hawkins and Mr. Marleau range from $125 to $361. When applied to the 1,294 sq ft of the subject property, they indicate a range of values from $161,750 to $467,100.
30The Board finds that the sales submitted as comparables are too different to produce a valid indication of current value. There are substantial differences in land area, amenities, such as garages, that were not adjusted for. The construction dates and consequent depreciation also span a large range. Selecting a median value, from these sales, would result in an indication of value that is more arbitrary than indicative of the value of the as-built subject property.
31In para. 40 of her expert report, Ms. Hawkins indicated that the cost approach to determining value is an appropriate approach to valuing newly built residential properties. She indicated that she chose to not use that valuation approach because buyers and sellers of residential properties seldom have reference to the cost of acquiring and building on land when making value judgements. In addition, she indicated that there are difficulties finding sufficient vacant land sales in built up areas to establish accurate estimates of land values.
32In this appeal of the current value, of a newly built residential property, we have evidence that established the land value at $100,000. We also have evidence of the value of the construction permit for the 2019 construction. The Board finds that the best approach to value is the cost approach to value because, on the facts of this appeal, the direct comparison approach to value failed to provide a reliable indication of value.
b. Determination of current value
33With respect to the cost of construction, MPAC conducted no cost analysis of the structure. Mr. Marleau in cross-examination acknowledged that his construction permit was issued for a declared value of $200,000. The structure is newly built and would not require any depreciation adjustment. In the Board’s view, the value of the construction permit represents the best available evidence of the cost of construction.
34Accordingly, the correct current value of the land and building, as of the January 1, 2016 valuation day is $300,000 based on the cost approach, which adds the $200,000 construction cost to the $100,000 land value.
Findings on Issue 1
35The correct current value of the subject property for the 2019 taxation year is $100,000.
36The correct current value of the subject property for the 2020 and 2021 taxation years is $300,000.
Issue 2 - Whether an equity reduction in the current value should be made pursuant to [s. 44(3)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html#sec44subsec3_smooth)(b) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html)?
37Section 44(3)(b) of the Act requires the Board to have reference to the value at which similar lands are assessed. If those properties are under assessed in relation to their correct current values equity, fairness in other words, requires that the assessment of the subject property be reduced to assess the subject property at a similar level of under-assessment.
38The burden of establishing that similar lands in the vicinity are under assessed belongs to the appellant (see McLachlan v Municipal Property Assessment Corporation, Region 04, 2021 CanLII 51701 at para. 37).
39In this matter Mr. Marleau presented the assessments of seven comparable as-built properties in his neighbourhood which are similar land.
40Only two properties submitted by Mr. Marleau are within the period of time for which we can adjust sale prices so that the Board may compare the adjusted sale prices to the assessed values. His property number 1, at 376 Marleau, sold for $395,000 in May 2017. The time adjusted value of this property was $375,645 and the 2016 assessment was $360,000, 4% less than its time adjusted sale price. His property number 3, at 352 Marleau, sold for $200,000 in May 2013. The time adjusted value of this property was $198,800 and the 2016 assessment was $250,000, 26% more than its time adjusted sale price.
41There was no comparison of vacant land assessments for the 2019 taxation year.
42Based on this very limited evidence Mr. Marleau has not established that similar lands in the vicinity are under assessed for the 2019, 2020 and 2021 taxation years for two reasons. Firstly, he presented no evidence of the assessment of vacant lots in the vicinity to determine it these were under assessed compared to his lot for the 2019 taxation year. Secondly, for 2020 and 2021 the average assessment of the two as-built properties he identified was 22% more than the sale prices of those properties. On average, they were over assessed, not under assessed which is a condition of equitable reduction under s. 44(3)(b).
Findings on Issue 2
43No reduction in correct current value is required under s. 44(3)(b) of the Act.
CONCLUSION
44The Board finds that the correct current value of the subject property for the 2019 taxation year is $100,000 as of the January 1, 2016 valuation day.
45The Board finds that the correct current value of the subject property for the 2020 and 2021 taxation years is $300,000 as of the January 1, 2016 valuation day.
46The Board finds that no downward adjustment of correct current value is required pursuant to s. 44(3)(b) of the Act.
ORDER
47The Board orders that the assessment of the subject property be:
a) reduced from $107,000 to $100,000 for the 2019 taxation year, and
b) reduced from $354,000 to $300,000 for the 2020 and 2021 taxation years.
"Pierre R. Lavigne"
PIERRE R. LAVIGNE
MEMBER
Assessment Review Board
Website: www.tribunalsontario.ca/arb