Gibbs v. Municipal Property Assessment Corporation Region 18, 2021 CanLII 26730

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment

Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

March 25, 2021

FILE NO.:

WR 169292A

AMENDED DECISION ISSUED:

March 29, 2021

Assessed Person(s):

John Leon and Rowenda MacLeon

Appellant(s):

Irene Gibbs

Respondent(s):

Municipal Property Assessment Corporation Region 18

Respondent(s):

City of Port Colborne

Property Location(s):

916 Lakeshore Road East

Municipality(ies):

City of Port Colborne

Roll Number(s):

2711-040-004-04400-0000

Appeal Number(s):

3419358

Taxation Year(s):

2020

Hearing Event No.:

741373

Legislative Authority:

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

APPEARANCES:

Parties

Representative

Irene Gibbs

Self-represented

Municipal Property Assessment Corporation

Sherly McRoberts

City of Port Colborne

No one appeared

HEARD:

March 15, 2021 by telephone conference

ADJUDICATOR:

Anthony LaRegina, Member

AMENDED DECISION

AMENDED DECISION

In accordance with Rule 114 of the Assessment Review Board’s Rules of Practice and Procedure, as amended May 2019, related to the correction of minor errors and in accordance with Rule 21.1 of the Statutory Powers and Procedure Act regarding the correction of errors, this Amended Decision is issued to correct error(s) in the Decision regarding the Roll Number in the Title of Proceedings. The amendment has been underlined for ease of reference. There are no other changes in this Amended Decision.

OVERVIEW

1Irene Gibbs (the “Appellant”), representing herself as the current property owner, filed a property assessment appeal for the 2020 taxation year with the Assessment Review Board (the “Board”) regarding her property located at 916 Lakeshore Road East (“Subject Property”) in the City of Port Colborne (“City”). It is the Appellant’s position that the Municipal Property Assessment Corporation’s (“MPAC”) current value assessment is too high and that the correct current value assessment should be no more than $340,000. At this hearing, MPAC has taken the position that the current value assessment should be confirmed at $394,000.

2Pursuant to s. 40(11) of the of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”), the City is a party to this proceeding. No one appeared at the hearing on behalf of the City, and no evidence was submitted on its behalf.

3The Subject Property was first purchased by the Appellant’s brother in-law John Leon on May 1, 2015 for $425,000. The purchase is categorized in MPAC’s evidence as an open market sale, and there is no evidence to dispute the validity of this sale. The Subject Property was subsequently purchased by the Appellant on November 27, 2019 from John Leon for $475,000. This was categorized as a family sale and therefore not an open market arms length transaction.

Issues for the Hearing

4At issue in this proceeding is:

1. a determination of the current value of the Subject Property; and

2. whether an equity reduction in the current value should be made to compensate for the assessment of similar lands in the vicinity.

Result

5The Board finds that the current value of the Subject Property for the 2020 taxation year is $425,000. Pursuant to s. 44(3)(b) of the Act, no further equitable reduction to the current value is required to compensate for the assessment of similar lands in the vicinity. MPAC is not requesting an increase in assessment, and therefore the Board confirms the returned value of $394,000 for the 2020 taxation year.

Description of Subject Property

6The Subject Property is a single-family detached residence (not on water), located at 916 Lakeshore Road East in the City of Port Colborne. The actual and effective lot area is 1.18 acres with a frontage of 92.8 feet and a depth of 572.1 feet. The structure is a one and three-quarter storey single family home of quality 6.5 construction built in 2003. The total building area is 1,907 square feet, consisting of 1,182 square feet on the main floor, 725 square feet on the second floor and 1,182 square feet in the basement with no finished space. The home is in average condition and has 3 bedrooms, 2 bathrooms and 1 fireplace. The Subject Property also has an attached garage with a building area of 612 square feet. The Subject Property has been returned at $394,000 for the 2020 taxation year.

ANALYSIS AND FINDINGS

Issue 1 – A determination of the current value of the Subject Property

7The first issue to be determined on this appeal is the correct current value of the Subject Property for the 2020 taxation year. Pursuant to s. 19(1) of the Act, the assessment of land shall be based on its current value. The Act also provides that, for the 2017 to 2020 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016 (“current value”). As defined in the Act, “current value means in relation to land, 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.” This statutory language translates the Subject Property’s current value into its market value as of January 1, 2016.

8To determine market value, MPAC has utilized the direct sales comparison approach and submitted into evidence the sale of comparable properties in the vicinity of the Subject Property. The comparable properties rarely sell on the valuation day of January 1, 2016, and therefore their sale values are time-adjusted to greater or reduced values depending on whether the date of the sale occurred before or after the valuation day. According to the time-adjusted evidence submitted by MPAC, there was a 34.83% increase in market value over a 23-month period starting January 14, 2015. MPAC created a time adjustment factor table and graph by month covering the same period and applied these values to time-adjust the comparable sales provided in evidence.

MPAC’s Comparable Properties

9The Board has reviewed the sale of the Subject Property as well as the three suggested comparable property sales, sold between 2015 and 2016 in the vicinity of the Subject Property, as submitted by MPAC (see Table 1 below).

Table 1 - MPAC’s Comparable Property Sales

Subject Property

Property 1

Property 2

Property 3

Property 4

Address

916 Lakeshore Road East

916 Lakeshore Road East

5231 Sherkston Road

547 Cedar Bay Road

18 Shamrock Avenue

Distance from Subject - kilometres

0

7.349

3.5045

4.8185

Current Value Assessment $

394,000

394,000

333,000

478,000

355,000

Sale Date

May 2015

October 2015

January 2016

July 2016

Sale Value $

425,000

324,900

460,000

345,000

TAS sale value $

452,388

335,218

456,729

364,562

Property Code and Description

(301)

Single Family Detached

(301)

Single Family Detached

(301)

Single Family Detached

(301)

Single Family Detached

(301)

Single Family Detached

Actual/Effective Year Built

2003

2003

1948

2012

2004

Effective Site Area Acres

1.18

1.18

1.46

0.4

0.13

Total Building Area –

Square Feet

1907

1907

1886

2377

2,194

First Floor

– square feet

1182

1182

950

1254

1244

Second Floor

– square feet

725

725

936

1123

950

Full Storeys

1.75

1.75

2

2

1.75

Attached Garage square feet

612

612

n/a

424

506

Detached Garage square feet

n/a

n/a

360

n/a

n/a

Outdoor Pool

no

no

yes

no

no

MPAC’s Opinion of Comparability

Subject

Inferior

Superior

Similar

10MPAC has taken the position that although the most similar property to the Subject Property in terms of building area and age is 18 Shamrock Avenue with a time adjusted sale value of $364,562, the best comparable property sale to establish the current value of the Subject Property is the sale of the Subject Property itself. MPAC argues that the Subject Property sold in May 2015 for $425,000, and the application of the time adjusted factor results in a value of $452,388.

11MPAC requests that the Board find the current value to be $452,000 and further requests that the returned current value assessment be confirmed at $394,000 as MPAC is not requesting an increase in value.

12MPAC also presented a study analysing the merits of using the Price-Per-Square -Foot Measure of Value to determine the current value of the Subject Property. However, MPAC concluded that this approach is a poor indicator unless the comparable properties and Subject Property are very similar in terms of lot size, building area as well as internal and external features. MPAC asserts that in this case, the comparable properties are not similar enough to utilize the price per square foot methodology in establishing the current value of the Subject Property.

The Appellant’s Evidence

13The Appellant has submitted that she purchased the home from her brother in-law for $475,000 in 2019 and asserts that this was not an arms length sale and cannot be considered a fair selling price for the Subject Property. The Appellant also claims that the purchase from her brother in-law also included furniture and fixtures which has inflated the purchase price.

14The Appellant further submitted that her brother in-law purchased the home in 2015 for $425,000 but again, for many reasons he overpaid for the Subject Property. The Appellant did not provide the specific reasons and did not dispute the sale as an invalid sale. In fact, Bill Berkhout, the Appellant’s real-estate broker, claimed that the Subject Property was listed at $500,000, and the listing expired. Mr. Leon put an offer after the expiration of the listing for $425,000. Neither Mr. Berkhout nor the Appellant questioned the validity of the sale.

15The Appellant also pointed out that the price change over time graph presented by MPAC demonstrates that the majority of the increase in value occurred in 2016, whereas the sale of the Subject Property occurred in 2015 during a period of relatively little price appreciation. The Appellant submits that the stable market in 2015 does not justifying a time adjustment for the Subject Property from the May 2015 sale date to the valuation day of January 1, 2016.

16The Appellant submitted that her area is a modest residential area of average size homes and that the 15 homes east and west of her property were assessed at an average of $283,000. The Appellant asserted that her home is very much in keeping with the homes in the area with standard finishes which include: fixed and casement windows on the interior, decorative block and vinyl siding on the exterior, two bathrooms with a plastic tub surround, single sink and toilet. The Appellant claimed that there have been no changes to the Subject Property since the home was built in 2003.

17The Appellant introduced numerous comparable assessments but selected the assessment of three comparable properties which she claimed are her best comparable properties to the Subject Property. They are listed as follows.

Property

Year Built

Land Area. Acres

Living Area S.F.

Assessed Value

916 Lakeshore Road East- Subject

2003

1.18

1907

394,000

808 Lakeshore Road East

1954

3

Not certain claims 2400

344,000

512 Lorraine Road

1972

1

2469

340,000

936 Lakeshore Road East

1975

3

2158

242,000

18The Appellant submitted that these are the three most similar properties located in very close proximity to her home and therefore requests that the Board reduce her current value assessment to no more than $340,000 in line with both 809 Lakeshore Road East and 512 Lorraine Road.

19Mr. Berkhout, a Remax Broker, presented his valuation letter stating that the value of the Subject Property should be between $330,000 and $335,000 based on the two comparable property sales introduced by MPAC: 547 Cedar Bay Road and 18 Shamrock Avenue. Mr. Berkhout stated that these are two very good comparable property sales to the Subject Property requiring the least adjustment.

20Mr. Berkhout submits that 547 Cedar Bay Road is a good comparable property sale requiring no adjustments for time, finished basement or accessary building. The building is newer than the Subject Property, and therefore he suggests a 5% reduction in the square foot sale price which translates into $178.37 per square foot for an overall value of the Subject Property of $340,000.

21With regards to 18 Shamrock Avenue, the only adjustment necessary is an 8% time-adjustment to January 2016 therefore increasing the sale price per square foot from $156.82 to $169.36 which would result in an overall value for the Subject Property of $323,000.

22Mr. Berkhout submits that utilizing the direct sales comparison approach based on these two very good comparable property sales yields a value of between $330,000 and $335,000 for the Subject Property.

23Mr. Berkhout asserts that MPAC, in their submission and evaluation of the “Price per Square Foot Methodology” to establish the current value of the Subject Property, failed to account for the possibility of adjusting comparable sales to accommodate the differences between properties. He claims that his analysis has adjusted for the differences between the comparable sales and the Subject Property.

Findings on Issue 1 - A determination of the current value of the Subject Property

24In support of establishing a current value for the Subject Property, the Board has always held that the best evidence is the sale of the Subject Property. In this case the Subject Property sold in May 2015 for $425,000. There is no evidence to suggest that the sale of the Subject Property was not a legitimate arms length transaction which in the end was $75,000 less than the original $500,000 list price for the Subject Property.

25MPAC has requested a time adjusted sale value for the Subject Property from $425,000 to $452,000 based on the price change over time analysis. The Board has analysed the graph and agrees with the Appellant that the market was very stable during 2015 and the majority of the increase in value occurred in 2016.

26The Board will therefore set the current value of the Subject Property at the unadjusted sale value of $425,000 which occurred in May 2015.

27The Board agrees with both MPAC and Mr. Berkhout that the best comparable property sales to further support the current value of the Subject Property are 18 Shamrock Avenue and 547 Cedar Bay Road. The two properties have a time adjusted sale range between $364,562 and $456,729.

28In the case of 18 Shamrock Avenue, which we all agree is the best comparable property sale, was built in 2004 vs the Subject Property which was built in 2003. The main difference is that the Subject Property has a 1.18-acre lot compared to 18 Shamrock Avenue, which has only a 0.13-acre lot. This difference demonstrates that the current value of the Subject Property should be greater than the time adjusted sale value of 18 Shamrock Avenue.

29Regarding 547 Cedar Bay Road, the Board finds that this is a superior property to the Subject Property. This property was built in 2012, nine years newer than the Subject Property. It has a larger building area of 2,377 square feet (vs the Subject Property at 1,907 square feet), but this property’s lot is only 0.4 acres (vs the Subject Property at 1.18 acres). When analysing all points of comparison, the Board finds that this is a superior property to the Subject Property, and therefore the current value of the Subject Property should be less than the adjusted sale value of 547 Cedar Bay Road.

30Based on the best available evidence, the Board finds the current value of the Subject Property to be $425,000 based on a January 1, 2016 valuation day which falls in the middle of the time adjusted sale range of 18 Shamrock Avenue and 547 Cedar Bay Road.

31Regarding the price per square foot methodology of establishing the current value of the Subject Property, the Board agrees with both MPAC and Mr. Berkhout. MPAC is correct in stating that the price per square foot approach is only valid if the two properties being compared are very similar in all characteristics. Mr. Berkhout is also correct in stating that if adjustments are made for the differences between the two properties, then the adjusted price per square foot is also a viable approach. In this case Mr. Berkhout failed to make an adjustment for the one-acre difference in land as well as the building areas between the two comparable properties and the Subject Property. Regardless, the best evidence of current value is always the sale of the Subject Property, and therefore in this case the Board has decided that the price per square foot methodology is given no weight in establishing the current value of the Subject Property.

Issue 2 – whether an equity reduction in the current value should be made to compensate for the assessment of similar lands in the vicinity

32Section 44(3)(b) directs that, after determining current value, the Board shall have reference to the value at which similar lands in the vicinity are assessed and “adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.”

33The Assessment to Sales Ratio (“ASR”) of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed below its current value. If other properties are assessed below their current value, a reduction in the assessment below current value is required to make the assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by comparing the assessment as returned to the time-adjusted sale price, expressed as a mathematical ratio.

34MPAC presented an equity analysis of 30 property sales of single-family detached not on water with a property code of 301 that occurred from January 1, 2015 to December 31, 2016, located within five kilometres of the Subject Property. This equity analysis of 30 properties results in a median ASR of 1.008 with a Coefficient of Dispersion (“COD”) of 10.3. MPAC submits that MPAC’s standards indicate that for residential properties, the median ASR should fall between 0.95 and 1.05, and the COD should be less than 15. If the median ratio falls within this range, this reveals that the current value assessments are reflective of sales prices in the vicinity and therefore, no further adjustment is required. In this case, the median ASR falls within the range at 1.008 and the COD is 10.3. Therefore, MPAC recommends that no further downward adjustment is required to the current value of the Subject Property.

35The Appellant has requested an assessment value of $340,000 based on the assessment of 808 Lakeshore Road East, 512 Lorraine Road and 936 Lakeshore Road which she has submitted are the best comparable properties in her area.

Findings on Issue 2 - Equitable Reduction in Assessed Value

36The Board finds that MPAC’s evidence of 30 property sales resulting in ASRs of 1.008 to be the best evidence in support of equity.These sales are all time-adjusted and the resulting ASRs are within the acceptable range of 0.95 to 1.05. The sample of 30 properties is much larger than a sample of three properties presented by the Appellant. In addition, when utilizing the assessments of properties in the area, they must be very similar to the Subject Property in order to make an adjustment for equity. In this case the properties presented by the Appellant were 28 to 49 years older than the Subject Property and therefore not directly comparable to the Subject Property. Furthermore, these properties did not sell, and therefore the Board could not evaluate the differences between the assessment value and the sale value to justify an equity adjustment.

37The Board finds that based on MPAC’s equity study which resulted in the ASRs of 1.008 and a COD of 10.3, no additional downward adjustment is warranted to the current value of the Subject Property to ensure that the assessment is equitable with the assessment of similar properties in the vicinity.

CONCLUSION

38The Board finds that the correct current value of the Subject Property is $425,000 for the 2020 taxation year. Furthermore, the Board finds that no equitable reduction is required under s. 44(3)(b) of the Act.

ORDER

39MPAC has not requested an increase in assessment value, therefore the Board orders that the assessment of the Subject Property be confirmed at $394,000 for the 2020 taxation year.