Kenneth Charles Arkell v. Municipal Property Assessment Corporation Region 24, 2021 CanLII 2450

Tribunals Ontario Tribunaux décisionnels Ontario Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: January 14, 2021 FILE NO.: WR 167844 Assessed Person(s): Kenneth Charles Arkell, Joshua McClinchey and Robyn McClinchey Appellant(s): Kenneth Charles Arkell Respondent(s): Municipal Property Assessment Corporation Region 24 Respondent(s): Municipality of Central Huron Property Location(s): 34942 Bayfield River Road Municipality(ies): Municipality of Central Huron Roll Number(s): 4030-240-025-04600-0000 Appeal Number(s): 3413562 Taxation Year(s): 2020 Hearing Event No.: 737119 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties	Representative
Kenneth Charles Arkell, Joshua McClinchey and Robyn McClinchey	Self-represented
Municipal Property Assessment Corporation	Matt Butler
Municipality of Central Huron	No one appeared

HEARD: December 7, 2020 by video conference

ADJUDICATOR(S): Jennifer Griffith, Member

DECISION

OVERVIEW

1Kenneth Charles Arkell, Joshua McClinchey and Robyn McClinchey (the “Appellants”) are the owners of 34942 Bayfield River Road (the “Subject Property”) in the Municipality of Central Huron (the “Municipality”) and are self-represented at the hearing.

2The Subject Property is vacant land owned by a non-farmer with a portion being farmed (Property Code 260). The Subject Property has a site area of 86.64 acres which comprises of 37 workable acres that are being farmed by a tenant farmer; and 49.64 acres (a mix of bush, swamp and pond) that are not farmed. Of the area that is not farmed, 25.35 acres are designated as conservation land.

3The portion of the Subject Property’s land that is used for farming purposes is pursuant to s. 19(5) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) which states that:

Farm lands and buildings - For the purposes of determining the current value of farm lands used only for farm purposes by the owner or used only for farm purposes by a tenant of the owner and buildings thereon used solely for farm purposes, including the residence of the owner or tenant and of the owner’s or tenant’s employees and their families on the farm lands,

(a) consideration shall be given to the current value of the lands and buildings for farm purposes only;

(b) consideration shall not be given to sales of lands and buildings to persons whose principal occupation is other than farming; and

(c) the Minister may, by regulation, define “farm lands” and “farm purposes”.

4Pursuant to s. 19(1), the assessment of land shall be based on its current value; and s. 19.2(1)(4) provides that, for the 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016.

5MPAC has assessed the current value of the Subject Property at $486,000 for the 2020 taxation year. The apportionment breakdown is as follows:

Residential (Full) $116,500 Farm (Full) $369,500 TOTAL $486,000

6The Appellants have filed an appeal for the 2020 taxation year with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Act . It is their position that MPAC’s assessment of current value assessment is too high and that the correct current value should be in the range of $359,000 and $360,000. Because the range is so small, the Board picks $359,000 as this is the valuation they requested based on the current value assessment of the property next door. MPAC takes the position that the correct current value based on the most comparable properties should be $486,000.

7Pursuant to s. 44(3)(b) of the Act, the Municipal Property Assessment Corporation (“MPAC”) takes the position that an equitable reduction of the current value is not required. The Appellant asserts that equity is not at issue. As the onus to demonstrate the correctness of equity rests with the Appellant, the Board accepts the Appellant’s assertion that equity is not at issue.

8Pursuant to s. 40(11) of the Act, the Municipality is a party to this proceeding; however, no one appeared on behalf of the Municipality.

Issues for the Hearing

9At issue in this proceeding is:

1. A determination of the current value of the Subject Property for the 2020 taxation year: a. Direct Comparison Approach based on sales; and b. Negative Issues Impacting the Subject Property.

Result

10The Board finds the correct current value of the Subject Property is $486,000 as of the valuation date January 1, 2016, which is applicable to the 2020 taxation year for the reasons set out below.

11Pursuant to s. 44(3)(b) of the Act, a further reduction is not required. Therefore, the Board confirms the returned assessment of $486,000 for the 2020 taxation year. The following apportionment breakdown is also confirmed:

Residential (Full) $116,500 Farm (Full) $369,500 TOTAL $486,000

ANALYSIS

Issue 1 - A determination of the current value of the Subject Property for the 2020 taxation year.

Direct Comparison Approach Based on Sales

12In 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”. The valuation date for the 2017 to 2020 taxation years is January 1, 2016.

13Reviewing the following evidence presented in support of current value, the Board finds the best evidence is the median sale price of $492,683 of the six sales presented by MPAC, with a median site area of 77.85 acres and a median sale date of 2016.

14Because of differences in the soil class acreages, the Board does not rely on the sale price per acre. Instead, the Board relies on the median time-adjusted sale price which falls between the inferior and superior comparable properties to the Subject Property. The Board finds the median time-adjusted sale price of $492,683 represents the best evidence of arm’s length transaction between a willing buyer and a willing seller pursuant to s. 19(1).

15The Appellants present no sales in support of the current value.

MPAC’s Proposed Comparable Properties

16Matt Butler, a representative for MPAC, presents a Valuation Report dated November 3, 2020, which he prepared and testifies to the information contained in the report.

17MPAC testifies the Subject Property was inspected three times. A full inspection in the presence of one of the owners (Mr. Arkell) was done on October 28, 2020; the exterior was inspected on April 1, 2020; and the previous inspection was done on June 22, 2018. The inspections confirmed that MPAC’s data of the Subject Property was current and complete.

18MPAC testifies that the Subject Property is assessed as having 37 acres of farm lands with a soil class two rating; 25.35 acres of conservation land with a soil class six rating; two acres with a pond with a soil class six rating; and 22.29 acres of bush land with soil class five rating. MPAC’s soil class ratings run from one – six, meaning that the best tillable soil is one and the worst is six.

19MPAC testifies that it relies on the Direct Comparison Approach to value which estimates the current value of the Subject Property by adjusting the sale price of other properties that have sold recently for differences in property characteristics between the Subject Property and other sold properties. MPAC further states that sold properties considered to be inferior to the Subject Property require an upward adjustment to their sale prices; and sold properties with features considered superior to the Subject Property require a downward adjustment to their sale prices.

20In support of current value, MPAC presents the following six suggested comparable properties, which sold in 2015 and 2016 and located approximately 17.44 kilometres away from the Subject Property.

21MPAC describes three of these six suggested comparable properties located at Maitland Line; 39755 Blyth Road; and 78004 Tipperary Line as inferior to the Subject Property because they have fewer acres that are farmed, in some cases, either smaller or larger bush and swamp acreages, and are mostly smaller in total acreages. The remaining three suggested comparable properties located at 37641 Maitland Block Road; Huron Road (Roll ending 07000); and Huron Road (Roll ending 06900) are considered by MPAC as superior to the Subject Property because they have larger number of acres that are farmed and are mostly larger in total acreages.

22The following table is the analysis of the six suggested comparable properties:

SALES ANALYSIS

6 SUGGESTED COMPARABLE PROPERTIES	Actual Site Area (acres)	Tillable (acres) Soil class 1	Tillable (acres) Soil class 2	Tillable (acres) Soil class 3	Tillable (acres) Soil class 4	Tillable (acres) Soil class 5	Tillable (acres) Soil class 6	SALE DATE	TIME ADJUSTED SALE PRICE	TIME ADJUSTED SALE PRICE (per acre.)
Maitland Line	83.5	0	28	0	0	14	41.5	2015	$368,555	$4,414
39755 Blyth Road	55.81	0	27	0	0	13.81	15	2016	$398,704	$7,144
78004 Tipperary Line	40	0	32	0	0	8	0	2016	$409,285	$10,232
37641 Maitland Block Road	93.12	0	0	47.12	0	47	0	2016	$576,082	$6,186
Huron Road	70.6	0	64.1	0	0	6.5	0	2015	$668,261	$9,465
Huron Road	96.7	28	39	0	0	29.7	0	2016	$734,304	$7,594
Median	77.05							2016	$492,683	$7,594
Subject Property	86.64	0	37	0	0	22.29	27.35	n/a	n/a	n/a

23Based on the above analysis MPAC believes that the best estimate of current value is $486,000 which is based on the sales of the most similar comparable properties. MPAC argues that the time-adjusted sale prices range from $368,555 to $734,304 and by bracketing the sales the estimated current value of $486,000 falls within the sale price ranges.

Appellant’s Proposed Comparable Property

24The Appellants present no sales evidence in support of current value.

Negative Issues Impacting the Subject Property

25The Appellants believe that the current value of the Subject Property is negatively impacted by many factors like several water troughs, a creek running along the northern boundary, swampy and wet areas, poor drainage due to broken tiles, grass hoppers, phragmites, seasonal weather condition and soil erosion. The Appellants estimate that it would cost approximately $8,000 to replace the soil.

26The Appellants argue that the Subject Property has no commercial value, no productive or use value because it is designated by Ontario as a tree museum. The Appellants argue that the value of farm properties is also negatively impacted by falling farm commodity prices (ethanol, bean, corn etc.), interest rate and other government legislations.

27The Appellants state that the Subject Property was listed for sale approximately four years ago for a period of six months, with a list price of $800,000 and received no offers. However, after the listing had expired, a local farmer offered to buy the Subject Property for $350,000 if the broken tiles (which is one of the factors causing the poor drainage) were replaced. The Appellants rejected the offer, because they believed that land value was approximately $400,000 at the time.

28The Appellants also testify that a neighbouring property to the Subject Property is assessed at $359,000 and based on that assessment, the Appellants are of the view that the correct current value for the Subject Property should be in the range of $359,000 to $360,000. In support of this argument, the Appellants provide a print-out of a computer page with limited information about the neighbouring property showing that it is a Property Type 200, assessed value of $359,000, a site area of 41.59 acres, no valid sale since 2012 and an incomplete address.

Findings on Current Value

29Reviewing the evidence presented in support of current value, the Board finds the best evidence is the median sale price of $492,683 of the six sales presented by MPAC, with a median site area of 77.85 acres and median sale date of 2016.

30Because of differences in the soil class acreages, the Board does not rely on the sale price per acre. Instead, the Board relies on the median time-adjusted sale price. The Board finds the median time-adjusted sale price of $492,683 represents the best evidence of arm’s length transaction between a willing buyer and a willing seller pursuant to s. 19(1).

31The Appellants present no sales of suggested comparable properties to assist the Board in its determination of current value pursuant to s. 19(1).

32Regarding the real estate listing of the Subject Property approximately four years ago for $800,000. The Board finds that the Appellants present no documented evidence to show that the Subject Property was listed for sale and for a listing price of $800,000. The Board finds that even if the Subject Property was listed, the real estate listing would provide no valuable information for the determination of current value, because the Subject Property was not sold.

33The Board also did not rely on the assessed value of $359,000 for a neighbouring property to the Subject Property. The reason being that the Appellants provide only limited information about the neighbouring property (e.g. assessed value, site area and Property Type 200). Most importantly, the Board finds that the neighbouring property was not sold, is significantly smaller with a site area of 41.59 acres, than the Subject Property with 86.64 acres and provides no valuable information to assist the Board in its determination of current value.

34Regarding the Appellants argument that there are many negative factors (e.g. water troughs, creek, swampy and wet areas, poor drainage, broken tiles, grasshoppers, phragmites, seasonal weather conditions and soil erosion) impacting the current value of the Subject Property. The Board finds that the Appellants present no quantitative evidence to demonstrate the negative impact on the current value; and present no documented cost-to-cure estimates for remedial work that would be necessary to mitigate the negative issues impacting the current value of the Subject Property. Therefore, the Board puts no weight on this argument.

35The Board finds that MPAC recognizes many of the negative factors impacting the Subject Property (water troughs, creek, swampy and wet areas, poor drainage etc.) by assessing the 49.64 acres of non-farm lands with the lowest soil class ratings five and six, which equates to significantly lower values as compared to soil class rating one, two, three which are more valuable. As shown above, the Subject Property's 37 acres of farm lands (soil class two rating) are assessed at $369,500, whereas, the 49.64 acres of non-farm lands (soil class 5 and 6 rating) are assessed at $116,500 which is significantly lower.

CONCLUSION

36The Board finds the correct current value for the Subject Property is $492,683 for the 2020 taxation year. This correct current value supports the returned assessment $486,000 which the Board confirms for the 2020 taxation year.

37The Board also finds that equity pursuant to s. 44(3)(b) is not at issue and no further reduction is required.

ORDER

38The Board orders the confirmation of the returned assessments of $486,000 for the 2020 taxation year. The following apportionment breakdown is confirmed:

Residential (Full) $116,500 Farm (Full) $369,500 TOTAL $486,000