Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: July 20, 2021

FILE NO.: WR 172146

Assessed Person(s): Michael Willis

Appellant(s): Michael Willis

Respondent(s): Municipal Property Assessment Corporation Region 32

Respondent(s): Township of Schreiber

Property Location(s): 312 Newman Street

Municipality(ies): Township of Schreiber

Roll Number(s): 5851-000-002-12200-0000

Appeal Number(s): 3432467 and 3449333

Taxation Year(s): 2020 and 2021

Hearing Event No.: 747571

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

APPEARANCES:

Parties Representative

Michael Willis Self-represented

Municipal Property Assessment Corporation Glenn Spiess Emily Hopkins (observing)

Township of Schreiber Marleen Bottomley (observing)

HEARD: July 6, 2021 by telephone conference call

ADJUDICATOR(S): Joanne Laws, Member

DECISION

OVERVIEW

1For the 2020 and 2021 taxation years, the Municipal Property Assessment Corporation (“MPAC”) returned an assessed value of $30,500 for the property located at 312 Newman Street in the Township of Schreiber (the “Subject Property”).

2Michael Willis (the “Appellant”) filed an appeal with the Assessment Review Board (the “Board”). He takes the position that the Subject Property’s assessed value is too high and that the correct current value should reflect the October 2018 purchase price of $3,000.

3In reviewing the assessment data applicable to the Subject Property, MPAC takes the position that the assessed value is the current value.

4Marleen Bottomley of the Township of Schreiber (the “Municipality”) attended the hearing as an observer.

Issues for the Hearing

5At issue in this proceeding is:

1. Does the sale of the Subject Property reflect its current value as defined in the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”)? If not, what are comparable properties?

2. Whether an equity reduction in the current value should be made?

Result

6The Board finds that the current value of the Subject Property for the 2020 and 2021 taxation years is $24,000. The 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.

7Accordingly, the assessment as returned of $30,000 is reduced to $24,000 in the residential property class for the 2020 and 2021 taxation years.

ANALYSIS

Description of Subject Property

8The Subject Property is 0.14 acres in size. It is improved with a single-storey residence built in 1945 measuring 1,265 square feet (“sq. ft.”) with an unfinished basement. MPAC provided photographs of the front and rear aspects of the residence.

Issue 1 – Does the Sale of the Subject Property reflect its current value and, if not, what are comparable sale properties?

9There were two sales of the Subject Property. The first occurred in June 2018 for $1.00. This transaction reflects the Municipality’s seizure of the Subject Property due to tax arrears. The second sale occurred in October 2018 for $3,000; the Appellant was the purchaser and the Municipality was the vendor.

10There is no dispute that the Subject Property had been vacant for 10 years prior to the October 2018 sale.

11Section 1(1) of the Act defines current value as: “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.” Section 19.2(1)4 provides that the valuation date for 2020 and 2021 is January 1, 2016.

MPAC’s Case

12MPAC argued that the October 2018 sale does not meet the test for current value as set out in the Act because it is encumbered by the outstanding property taxes.

13Glenn Spiess represented MPAC at the hearing and testified he inspected the Subject Property on May 7, 2020 confirming MPAC’s data and rated the building in poor condition. He presented his Valuation Report which included six sale properties, all of which are located within a kilometre of the Subject Property to support his position that the current value is $30,500. He provided an analysis of how each property compares to the Subject Property, concluding whether they are similar, superior or inferior. The sales occurred between October 2012 and April 2016 and were time adjusted to estimate the sale values as of the January 1, 2016 valuation date. Those values range from $24,264 to $51,945. Mr. Spiess rated all six properties to be in average condition.

14Mr. Spiess testified he adjusted the Subject Property’s data to account for the differences between it and the six sales and he concluded that the results of this analysis supported a current value.

15None of MPAC’s sale properties had been vacant prior to the sale dates. Mr. Spiess stated that MPAC values properties at their “highest and best use” and does not consider vacancy or seasonal occupation when assessing a property.

The Appellant’s Case

16Michael Willis, the Appellant, testified that the Municipality has experienced an economic downturn over the last 25 years due to the loss of employment opportunities. This has resulted in empty lots, vacant homes and reduced property values. He testified that in addition to being vacant for 10 years prior to his October 2018 purchase, the Subject Property was occupied on a seasonal basis and that it had not been heated unless it was occupied. He considers the Subject Property unsafe for habitation due to the existence of mold.

17He testified that the Municipality initially tendered the Subject Property for a value based on the outstanding taxes and when it did not sell for that amount, the Municipality reduced the tendered value at which time he purchased it.

18The Appellant argued that the best indication of current value is the October 2018 purchase price and other similar sales where the vendor was the Municipality. He argued that the current value is $3,000 because the Municipality could not sell the Subject Property for the full value of the tax arrears. He also acknowledged that the sale price may be at the lower end of the market value but that it would not be more than $5,000.

19The Appellant argued that MPAC’s sale properties are not comparable to the Subject Property because they have not been vacant for extended periods of time and that the Subject Property would only realize a market value similar to MPAC’s sale properties if it was improved.

20The Appellant presented a hand-written document with estimated sale values and sale dates for six properties but acknowledged the data was obtained by speaking to area residents. The Board gives no weight to this hearsay evidence.

Findings on Issue 1

21The Board accepts the Appellant’s undisputed testimony that the Municipality has experienced an economic downturn over the last 25 years and that the impact of this downturn is reflected in sale values.

22It is unclear whether the sale of the Subject Property is encumbered due to tax arrears, as argued by MPAC. For example, no evidence was advanced that the Appellant/purchaser was responsible for the remaining outstanding property taxes or assumed a lien. That said, the Board has generally found that a sale value subject to a foreclosure or a seizure due to outstanding property taxes does not reflect that property’s current value in accordance with the definition under s.1(1) of the Act. This is because these values reflect the vendor’s financial motivation to recoup losses rather than seeking the market value. This is the case with the October 2018 sale, as confirmed by the Appellant.

23Having found that the sale of the Subject Property is not a reliable indicator of its current value, the next best evidence presented is MPAC’s six sale properties. There was no evidence that they were not sold at arm’s length by willing sellers to willing buyers.

24Mr. Spiess testified he adjusted the Subject Property’s data to reflect the differences in condition, for example he considers the Subject Property to be in poor condition while the sale properties are in average condition. The Board is unable to place much weight to this testimony. No documentary evidence was received that the adjustments sufficiently reflected the probable sale values had these six properties been vacant for 10 years and were in the same state of neglect as the Subject Property.

25Based on the above, the Board finds that MPAC’s six sale properties are superior to the Subject Property and therefore, the Subject Property would not sell for more than the low end of the time adjusted sale values. Accordingly, the current value of the Subject Property is $24,000, rounded.

Issue 2 - 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?

26The 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 2

27The 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

28The Board finds that the current value of the Subject Property for the 2020 and 2021 taxation years is $24,000 and that no adjustment to the current value is required for the purpose of an equitable assessment.

ORDER

29The Board orders that the assessment of 312 Newman Street is reduced to $24,000 in the residential property class for the 2020 and 2021 taxation years.