Brent Channell A. Trustee v. Municipal Property Assessment Corporation Region 17, 2021 CanLII 61413

Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: June 29, 2021

FILE NO.: WR 171692

Assessed Person(s): Brent A. Channell and Denise M. Channell and 2785642 Ontario Inc.

Appellant(s): Brent Channell A. Trustee

Respondent(s): Municipal Property Assessment Corporation Region 17

Respondent(s): Township of Muskoka Lakes

Property Location(s): 1023 Leonard Lake Road 1 Unit 3

Municipality(ies): Township of Muskoka Lakes

Roll Number(s): 4453-090-005-03900-0000

Appeal Number(s): 3422092 and 3446543

Taxation Year(s): 2020 and 2021

Hearing Event No.: 743866

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

APPEARANCES:

Parties	Representative
Brent Channell A. Trustee	Robert Baranowski
Municipal Property Assessment Corporation	Shelby Roper
Township of Muskoka Lakes	No one appeared

HEARD: May 25, 2021 by telephone conference call

ADJUDICATOR(S): Joanne Laws, Member

DECISION

OVERVIEW

1For the 2020 taxation year, the Municipal Property Assessment Corporation (“MPAC”) returned an assessed value of $1,091,000 for the property located at 1023 Leonard Lake Road 1 Unit 3 (the “Subject Property”). Brent A. Channell Trustee (the “Appellant”) filed an appeal with the Assessment Review Board (this “Board”), taking the position that the assessed value is too high.

2In reviewing the assessment data applicable to the Subject Property, MPAC recommended a reduction in the value returned to $1,082,000. For the 2021 taxation year, MPAC returned the assessment at this value.

3The Appellant took the position that this value is still too high and that the correct current value should be in the range of $500,000 to $860,000.

Issues for the Hearing

4At issue in this proceeding is:

1. What is the correct quality of construction?
2. What is the correct current value?
3. Should there be an equitable reduction of the current value and, if so, what should be the reduction amount?

Result

5The Board finds that a determination of the quality of construction is not required.

6The Board finds that the current value of the subject property is $1,082,000 in the residential property class for the 2020 and 2021 taxation years.

7The Board also finds that there is no evidence before it to support a reduction in this value when reference is made to the assessments of similar lands in the vicinity.

8Accordingly, the assessment of $1,091,000 is reduced to $1,082,000 for the 2020 taxation year and the assessment as returned of $1,082,000 for the 2021 taxation year is affirmed.

PRELIMINARY ISSUE- Should the Board find inadmissible MPAC’s non-expert’s witness’ opinion of value?

9MPAC’s fact witness Brooke Atkins, a Property Valuation Analyst, provided a conclusion of value based on her evidentiary reports.

10The Appellant’s representative, Robert Baranowski, argued that Ms. Atkins’ conclusion of value is opinion evidence and that opinion evidence can only be provided by a qualified expert witness and, therefore, it should be given no weight. The Board notes that Mr. Baranowski also provided an opinion of value based on the evidence advanced by both MPAC and himself.

11As recently decided in two decisions of this Board, Mieszkowska v Municipal Property Assessment Corporation Region 15, 2021 CanLII 44150 (ON ARB) (“Mieszkowska”) and Allen v Municipal Property Assessment Corporation Region 15, 2021 CanLII 44157 (ON ARB), Member Awoleri provided detailed analyses and findings on this issue, with which this panel agrees. In paragraph 25 of Mieszkowska Member Awoleri concluded:

[25] In this appeal, MPAC provided facts of market sales analysis to make its submissions on the current value of the Subject Property. Accordingly, it drew a conclusion expressed as an opinion of value by its witness, an MPAC employee. Ms. Lamothe reviewed the features/factual evidence of the Subject Property, and drew an inference based on what she observed and provided an opinion of value as an MPAC employee. The mandate of the Board, pursuant to the Act, is to determine the current value of the Subject Property. In exercising this mandate, the Board will review the evidence from the parties and determine which is the best evidence to find the current value. The Board will determine the weight to attach to Ms. Lamothe’s opinion of value in order to determine the best evidence to find the correct current value of the Subject Property.

12The Board finds that the opinions of value from non-expert witnesses is admissible. The Board has the discretion to determine the appropriate weight to attach to this evidence.

ANALYSIS

Description of Subject Property

13The Subject Property is a waterfront lot, on Leonard Lake Road in the Township of Muskoka Lakes. The lot size is 0.95 acres located on a peninsula providing three directional views of Leonard Lake. Access to the property is by a seasonal gravel road. There is 535 feet of waterfront which MPAC has adjusted to an effective 367.5 feet. The topography is level and there is a permanent dock. It is improved with a seasonal single-family detached residence, built in 2006, with 2,503 square feet (“sq. ft.”) on the first floor and 168 sq. ft. on the second floor and a cabin built in 2013 measuring 649 sq. ft. The total living area is 3,320 sq. ft.

Issue 1 - What is the Correct Quality of Construction

14Ms. Atkins testified that MPAC last inspected the Subject Property in 2015 and that the inspection information indicated the main building was custom built with superior materials. MPAC’s evidence included data from the inspection including 11 colour photographs of the interior and exterior of the Subject Property. Based on the data obtained from the inspection MPAC allocated a 7/10 quality of construction.

15Mr. Baranowski argued that because Ms. Atkins had not conducted the 2015 inspection, she could not make a conclusion of the quality of construction.

16He argued that the quality of construction was below 7 and presented nine black and white photocopies which he identified as recent photographs of the Subject Property. These documents were of very poor quality, the contents of which were mostly unrecognizable. The Board asked Mr. Baranowski to provide both the Board and MPAC with clearer copies, however he declined to do so.

Findings on Issue 1 - Quality of Construction

17The quality of construction is a ranking system created and used by MPAC. The Appellant spent some time arguing whether the quality of construction assigned to the Subject Property and other properties are accurate.

18MPAC’s interior and exterior photographs of the Subject Property are more reliable than the Appellant’s. They clearly reflect the quality and condition of the Subject property in 2015, which is near the January 1, 2016 valuation date whereas the Appellant’s photographs are farther from the valuation date and the subjects are unrecognizable.

19Regardless, the Board does not consider the quality of construction rating critical to its analysis. When comparing the Subject Property to the parties’ sale properties, the Board is able to evaluate comparability by way of the parties’ other evidence which include the characteristics (lot and waterfront size, building size and age etc.) and the exterior photographs.

Issue 2 - What is the correct current value of the Subject Property for the 2020 and 2021 taxation years?

MPAC’s Case

20MPAC presented four sale properties with descriptive details and photographs of each.

21Ms. Atkins testified that using the direct comparison approach to value and bracketing the sale properties, her opinion of current value exceeds the assessment as returned but MPAC is recommending a current value of $1,082,000. The scheme of the bracketing technique is that inferior properties will sell for less than the Subject Property, superior properties would sell for more and similar properties would reflect the value of the Subject Property.

22MPAC takes the position that the sale properties (four from MPAC and one from the Appellant) are similar to the Subject Property because they are located on the waterfront, in MPAC’s “small lake model” and “economic neighborhood” and they are located in the same municipality Ms. Atkins stated she expanded her search to different lakes within the municipality to find comparable properties. MPAC takes the position that prospective purchasers would not restrict their seasonal recreational property search to one lake.

23Ms. Atkins stated that it is difficult to estimate the current value of a seasonal recreational properties because such properties tend to be unique.

24Her analysis of MPAC’s four properties is that all are, on balance, superior to the Subject Property. Further, she presented time adjustment factors used to estimate the sale value of the properties as though they were sold on the January 1, 2016 valuation day. Those sale values are $554,000, $736,000, $950,000 and $1,218,000 (rounded).

25Ms. Atkins also presented an analysis of the time adjusted sale values per linear foot of effective waterfront, and per square foot of building area and per acre of the land to illustrate another method of determining current value. The Board has placed no weight on these analyses because they were not disclosed in accordance with the Schedule of Events for these appeals.

26When asked in cross-examination for the calculations she used to determine the recommended current value of $1,082,000, Ms. Atkins stated she did not calculate this value, but it was the value determined by MPAC’s model. Ms. Atkins also acknowledged that she did not include all of the properties’ data in her evidence.

27Regarding the Appellant’s single property comparable, 1191 Glen Gordon Road, Unit 20 (“1191”), MPAC argued it is inferior to the Subject Property because it has a shallow, weedy waterfront, older buildings and only one directional view of the waterfront. Mr. Baranowski argued that these features are subjective, and that people have different ideas of what is an inferior or superior characteristic.

The Appellant’s Case

28The Appellant presented one sale, 1191. It is located on the same lake as the Subject Property and sold in September 2016 for $460,000.

29Mr. Baranowski argued that properties on the same lake will be more reliable indicators of the Subject Property’s current value than properties located on other lakes and farther away. He identified other sales on Leonard Lake which he extracted from MPAC’s “Sales Used in Price Change over Time Analysis”. The Board searched for these properties in MPAC’s analysis and notes that it contains no descriptions of the properties’ physical details.

30The Appellant argues that MPAC’s evidence is not transparent: its calculations were not fully disclosed, nor were all the characteristics of the sale properties. The Appellant argues that MPAC selects only the characteristics that support its position of current value. The Appellant questioned the reliability of MPAC’s data because it did not adjust for inferior and superior factors in its bracketing analysis such as the distances between the four sale properties and the Subject Property.

31Based on the evidence submitted, the Appellant took the position that the Subject Property’s current value falls within the range of $500,000 to $860,000.

Findings on Issue 2 - Current Value

32The best evidence of current value is a sale of the Subject Property. Where no sale occurred, the Board looks to sales of similar properties as indicators of the current value. The Board has a total of five properties presented by the parties.

33Based on the nature and use of seasonal recreational properties, I find MPAC’s argument that these properties tend to be unique is reasonable. Where it is difficult to find similar properties the bracketing technique is an appropriate method of estimating a property’s current value.

34Regarding the Appellant’s argument that MPAC had not included some of the physical characteristics of its sale properties the Appellant did not provide the details claimed to be missing. The Board gives this unsupported statement no weight and will rely on the documentary evidence when determining comparability with the Subject Property.

35In addition, the Board rejects the Appellant’s argument that the Board ought to consider other sale located on the same lake as the Subject Property. No evidence was presented to enable the Board to make a meaningful comparison between them and the Subject Property. At paragraph 25 of Reid v. Municipal Property Assessment Corp., Region No. 7, [2014] O.A.R.B.D. No. 485 the Board stated:

[25] While assessment is not an exact science, the Act and Regulations set out rules that are designed to guide the assessment process so that current values are truly reflective of market values. No two properties are identical, especially in the case of seasonal recreational waterfront property. In making its decision, the Board must rely on accurate facts as to the features of the comparable sales, including dwelling size and quality, number and nature of secondary structures and lot sizes. Also being very important are the geographical features that make recreational property attractive to buyers, including size and nature of waterfront, topography, exposure, and, where appropriate, water quality.

36Further, in this instance, because the bracketing approach is appropriate, a value adjustment for inferior and superior characteristics is not necessary.

Analysis of the Sale Properties

37Four of the five sales presented by the parties occurred between October 2015 and October 2016 all of which are near the January 1, 2016 valuation date, and one occurred in June 2014 which is 18 months from the valuation date. Sales occurring within one year of the valuation date are usually preferred. However, a sale within 18 months is acceptable where, as in this case, the parameters of a search for sales are expanded due to the uniqueness of the properties in the market.

38I have considered the parties’ arguments about the distances between the Subject Property and their sale properties. Again, where the properties in a market are unique it is reasonable that the parameters of a search are expanded. The Board accepts Ms. Atkin’s testimony that the sale properties are located in the same market and that the distance between the properties affects desirability and, therefore value.

39MPAC’s Property 1, 1039 El-Kee Point Lane, located nearby on Brandy Lake, has less waterfront (262 feet), a single exposure (north), a slightly older main building (2003) and smaller and older cabin (432 sq. ft., 1963). The main building has 1,918 sq. ft. with a basement measuring 1,467 sq. ft., 40 percent of which is finished. The photographic evidence shows that the main building has a walk-out basement facing the waterfront. It has a larger lot (2.39 acres). The Board finds that, on balance, the Subject Property is superior to this property because, overall, it has newer buildings and because of the multiple views afforded by the peninsula location and longer waterfront. Accordingly, the Subject Property would sell for more than this property which sold in June 2014 for $1,175,000 with a time-adjusted sale value of $1,217,761.

40MPAC’s Property 2, 1107 Bruce Lake Drive, Unit 1, is located farthest from the Subject Property. It has less waterfront (216 feet), a smaller lot (0.58 acres), an older main building (1967) which has been renovated and is smaller (1,555 sq. ft.). It has a detached garage but not a cabin. The photographic evidence shows that, relative to the Subject Property, it is a modest building and there is only one directional waterfront view. However, unlike the Subject Property, it has a year-round access road which is likely a superior factor. Due to the mostly inferior qualities of this property, the Board finds that, on balance, the Subject Property is superior to this property which sold in September 2016 for $965,000 with a time-adjusted sale value of $949,678.

41MPAC’s Property 3, 1047 Brandy Crest Road has significantly less waterfront (185 feet) with a rocky shoreline. It has a detached garage but not a cabin and there is only one directional view over the water. The lot size is similar (1.05 acres), as is the age of the main building (2006). The living space is slightly larger with 1,931 sq. ft. on the main floor with a basement of the same size, most of which is finished. There has a year-round access road. Based on smaller lot size, smaller and rocky shoreline with only one directional view, the Board finds that, on balance, this property is inferior to the Subject Property. This property sold in October 2016 for $749,000 with a time-adjusted sale value of $735,733.

42MPAC’s Property 4, 1124 Leonard Lake Road 2, is located on the same lake as the Subject Property. It is similar to the Subject Property in that the lot is a peninsula shape with seasonal access. It has more shoreline (680 feet) and a larger lot (1.31 acres) with three directional exposure views. The main building is significantly older and smaller (1957, 746 sq. ft). It has a cabin but that too, is smaller and older (200 sq. ft., 1963). Based on the peninsula shape and location, the Board finds that the land is most similar to the Subject Property. However, based on the building age and size, the sale price of $551,000, time adjusted to $553,627 this property is inferior and, therefore the Subject Property, with a newer and larger building, will sell for more than this property.

43The Appellant’s sale property, 1191 Glen Gordon Road, Unit 20, is located on the same lake as the Subject Property. It has a larger lot (4.5 acres) but is similar to the Subject Property in waterfront (350 feet), a seasonal access road and a similar sized cabin (698 sq. ft.). This property sold in September 2016 for $460,000. There was a post-sale addition and renovation but at the time of sale, the main building was 988 sq. ft in size. The photographic evidence submitted by MPAC shows a modest building at the time of the sale and single direction of waterfront exposure. There is no disagreement that the waterfront is shallow and weedy with swampy and low-lying marsh land. Based on the above, the Board finds that this property is inferior to the Subject Property.

44Utilizing bracketing, the Board finds that the Subject Property’s current value would not be less than $1,218,000, rounded. This is the current value for the 2020 and 2021 taxation years.

Issue 3 - Does the current value determined require a reduction for it to be an equitable assessment when reference is made to the assessments of similar properties in the vicinity?

45The Appellant did not advance a position on the question of equitable assessment. MPAC produced an equity analysis report in the normal course of disclosure. That report found that no adjustment to the current value was necessary for the purpose of an equitable assessment.

Findings on Issue 3

46The Board finds that there is no evidence to support a reduction of the current value determined when reference is made to the assessments of similar lands in the vicinity.

CONCLUSION

47Although the evidence indicates that the correct current value of the Subject Property is not less than $1,218,000, rounded, no party has served a Notice of Higher Assessment and MPAC has adopted the position that the current value is $1,082,000. Accordingly, the Board finds that the correct current value is $1,082,000 for the 2020 and 2021 taxation years.