Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

August 04, 2021

FILE NO.:

WR 171293

Assessed Person(s):

Raymond Joseph McDonald

Appellant(s):

Raymond Joseph McDonald

Respondent(s):

Municipal Property Assessment Corporation, Region 28

Respondent(s):

Municipality of West Nipissing

Property Location(s):

Kirkpatrick CON 4 N PT LOT 9

Municipality(ies):

Municipality of West Nipissing

Roll Number(s):

4852-110-001-11501-0000

Appeal Number(s):

3421952, 3421953, 3421970, 3421971, 3421972 and 3448918

Taxation Year(s):

2017, 2018, 2019, 2020 and 2021

Hearing Event No.:

743376

Legislative Authority:

Sections 32 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES

Parties

Representative

Raymond Joseph McDonald

Self-represented

Municipal Property Assessment Corporation

Blair Adams

Municipality of West Nipissing

No one appeared

HEARD:

May 10, 2021 by telephone conference call

ADJUDICATOR(S):

Pierre R. Lavigne, Member

DECISION

OVERVIEW

1Raymond Joseph McDonald appealed, pursuant to s. 40(1) of the Assessment Act (“Act”), the correctness of the 2017 assessment of a 160-acre parcel of farm land. Pursuant to s. 40(26) of the Act, he is deemed to have brought the same appeal for subsequent years. Accordingly, this decision applies to the assessments for the taxation years 2017 to and including 2021.

Background

2In order to understand the assessments under appeal it is necessary to set out the history of the assessments.

3The 2017 assessment was for $32,000. An appeal of that assessment, together with a deemed appeal of the 2018 assessment of $54,000, which had increased as a result of an inspection, were first decided by this Board on March 14, 2019. Decision WR 155900, is reported as McDonald v Municipal Property Assessment Corporation, Region 28, 2019 CanLII 20818 (ON ARB).

4The finding in the 2019 decision was that MPAC had not met its burden to prove the correctness of the current value. The Board reduced the assessments for the 2017 and 2018 taxation years to the last uncontested value of $11,000.

5For the 2019 taxation year, the original assessment of $54,000 was reduced by MPAC, pursuant to s. 32 of the Act, to $11,000 to conform with the 2019 Board decision.

6For the 2020 taxation year the assessment was returned at $11,000.

7The 2019 decision of the Board, upon which the assessments for the 2017 to 2020 taxation years was based, was cancelled by the Board as a result of the Divisional Court’s decision on February 20, 2020 in Municipal Property Assessment Corporation v. Zarichansky, 2020 ONSC 1124 (“Zarichansky”), and a re-hearing was ordered, to be decided in accordance with the principles set out in Zarichansky. This hearing is the rehearing ordered by the Board.

8The result is that the assessments presently under appeal are as follows:

1. 2017: $32,000

2. 2018: $54,000 (increased as a result of inspection of the property)

3. 2019: $11,000 (decreased pursuant to s. 32 of the Act to conform to the 2019 Board decision)

4. 2020: $11,000

5. 2021: $11,000

9It is MPAC’s position that the correct current value of the land is $56,000, for all years under appeal. Mr. MacDonald’s position in submissions was that a correct value would be $32,000.

Areas of Agreement

10The parties agree that the subject property is farmland and buildings used only for farm purposes subject to s. 19(5) of the Act.

Issues for the Hearing

11At issue in this proceeding is:

1. What is the correct January 1, 2016 current value of the subject property?

2. Is an equity reduction in the correct current value required by s. 44(3)(b) of the Act?

Result

12The Board finds that the correct January 1, 2016 current value of the subject property is $40,500. The Board finds that an equity adjustment pursuant s. 44(3)(b) of the Act is required in the amount of $2,300. The Board concludes that adjusted assessment will be $38,200 for all years under appeal, including a deemed assessment for the 2021 taxation year.

ANALYSIS

Description of Subject Property

13The subject property is 160 acres of farmland with outbuildings but no residence. According to MPAC, the land is composed of 11 acres of good Class 2 soil, 7.9 acres of Class 4 pastureland, and the remaining 141.1 acres is Class 6 soil, the lowest quality class. The acreage of various soil classes is in dispute. On this land are the following farm buildings: a 1960 Type III barn of 2,016 sq. ft., a 1970 Type III barn of 2,700 sq. ft. and a 1980 Type III barn of 1,000 sq. ft. The farmland is situated in an area formerly known as Kirkpatrick Township in the municipality of West Nipissing. The property is located on the west border of the West Nipissing District almost in the District of Sudbury.

Issue 1 - What is the correct January 1, 2016 current value of the subject property?

The Governing Provisions

14Section 19.2 of the Act stipulates that January 1, 2016 is the day as of which land shall be valued for the 2017 to 2020 taxation year. Section 48.6 of the General Regulation O. Reg. 282/98 applies this valuation day to the 2021 and 2022 taxation years.

15Section 19(5) of the Act prescribes a special valuation manner for Farmland and Buildings. It provides that consideration shall be given to the current value of the lands and buildings for farm purposes only and excludes from consideration sales of land and buildings to persons whose principal occupation is other than farming.

16Section 40(17) of the Act places the burden of proof as to the correctness of the current value upon MPAC.

Evidence and Submissions of MPAC

17Mr. Adams, an assessor testifying for MPAC, indicated that to arrive at a valuation he employed the modified cost approach to valuation. This involves determining the value of the land as vacant from farm property sales, pursuant to s. 19(5) of the Act, and adding the depreciated cost of structures.

18He excluded the use of the income approach as it is difficult to separate the income from the land from the combined income from land, labour, equipment and quota. He excluded the direct comparison approach for the whole property including buildings due to lack of market data.

19Mr. Adams analysed 9 sales, near the January 1, 2016 valuation day, of vacant farm properties reproduced as Appendix 1 at the end of the decision.

20The time adjusted amounts are from a time adjustment study based on “598 sales of vacant and/or improved land from the subject property’s neighbourhood and adjacent areas from 2008-02-28 to 2020-10-01, a period of 152 months. The overall change in the market is 170.30%.”

21MPAC uses a point system to achieve a classification for mineral soils as follows:

Mineral Soil Class

Description

Points

1

This land has good drainage; good loam texture; and is nearly level. No physical limitations to a high level of farm production exist.

95-85

2

This land is subject to moderate limitations in use for farm crop production. These limitations may be drainage, rolling topography, moderate erosion, moderate stoniness, or a combination of two or more factors.

80-70

3

Similar limitations to those of Class 2 above only to a greater extent. This land has moderately severe limitations that restrict the range of crops or may require some development or management practices.

65-55

4

This land is subject to severe limitations for use in farm crop production such as: too susceptible to erosion, too stony, or too poorly drained to be cultivated frequently.

50-40

5

This land is generally unsuited to cultivation but can be used for grazing. It is subject to similar but more severe limitations than those of Class 4.

35-25

6

This land should be kept in vegetation because of steepness of slope, severe erosion, shallow soil, or other features that make cultivation impractical. This land is capable of producing only indigenous crops and is suitable for moderate grazing.

0-20

22Mr. Adams attempted to derive acreage values for each class of soil. His evidence is in the following extract of page 12 of his report:

Since all the above large acreage comparables have multiple soil classes, I will rely on the 2 lower acreage comparables, 4852 110 001 16055 on Highway 17 sold for a time adjusted sale amount of $48,012 for 18.19 acre (All Class 1) which works out to $2639.47 per acre for Class 1 soil. 4852 040 003 14912 on Levac Rd. sold for a time adjusted sale amount of $22,240 for 17.4 acres (All Class 2) which works out to $1278.16. Based on the calculated rate per acre of $2639.47 for Class 1 and the rate per acre of $1278.16 for Class 2, I would estimate the rate per acre of Class 4 soil to be $717.60 and a rate per acre of Class 6 soil to be $236.50.

23Applying these time adjusted values to the soil class areas Mr. Adams arrived at the following value for the land as vacant:

Class 2 - $1278.16/acre X 11 acres = $14,059.77

Class 4 - $717.60/acre X 7.9 acres = $5,669.04

Class 6 - $236.50/acre X 141.1 acres = $33,370.15

Total=$14,059.77 $5,669.04 + $33,370.15 = $53,098.96

24Using MPAC’s costing system, Mr. Adam’s valued the replacement cost new of the buildings at $39,988.11. Applying depreciation of $37,016.33, again according to MPAC’s costing system, produced a depreciated value of the farm buildings of $2,971.78.

25The value of the land as vacant, $53,098.96, added to the depreciated cost of buildings, $2,971.78, produced a total valuation of $56,070.74.

26Mr. Adams also analysed his comparable sales by quality relative to the subject property to establish a bracketed range of value for the subject property. The theory is that superior quality properties command a higher price than inferior quality properties. If the proposed sales are comparable and the quality judgements are correct, the value of the subject property should lie between the lowest superior quality sale price and the highest inferior quality sale price.

27Mr. Adams testified that he considered Sales 2 to 5 to be superior to the subject property, Sales 1, 6 and 7 slightly superior and Sales 8 to 9 as inferior in quality to the subject. An examination of the Sales 1 to 5 shows they have anywhere from three to seven times as much Class 2 soil as the subject property, while Sale 5 has 80 acres of Class 3 soil.

28Sale 6, with a time adjusted price of $75,860, he judged slightly superior because of its larger acreage of Class 3 soil (24 acres).

29Sale 7, with a time adjusted price of $48,414, he judged to be slightly inferior because of its smaller total area of 80.25 acres. It contains 40 acres of Class 4 soil and 39.75 acres of Class 6 soil.

30Sales 8 and 9 he judged to be inferior because of their overall size. Sale 8 is composed exclusively of 18.19 acres of Class 1 soil. Sale 9 is composed exclusively of 17.4 acres of Class 2 soil.

31Mr. Adams’ bracketing range was therefore between the slightly inferior Sale 8 with a time adjusted price of $48,414 and the slightly superior Sale 7 with a time adjusted price of $75,860 and consistent with Mr. Adams’ indication of value using prices for each soil class.

32Mr. Adams also completed an equity study which found that similar lands in the vicinity were assessed at 94.5% of the sales values. In MPAC’s operating standards any underassessment greater than 5% should be reduced pursuant to s. 44(3)(b) of the Act. Accordingly, Mr. Adams’ opinion of adjusted current value for assessment is $52,986, ($56,070.74 x 0.945), which he rounded to $52,000.

Evidence and Submissions of the Appellant

33Mr. MacDonald testified that of his 160 acres, nine acres are productive land, five acres are wet land from which he might get a crop 1 year out of 7. The balance of 146 acres are a forested mountain ridge.

34He relied upon an excerpt from the Canada Land Inventory, which defines Class 7 soils as “Soils in this class have no capability for arable culture or permanent pasture”, to establish that there are soils that are inferior to the lowest classification used by MPAC.

35A summary description of soil classes taken from the Ontario Ministry of Agriculture, Food and Rural Affairs (OMFRA) is as follows:

The system classifies mineral soils into seven groups according to their potentials and limitations. The first three classes are considered capable of sustained production of cultivated field crops and are considered prime agricultural land resources. The fourth class is marginal for cultivated field crops. The fifth is capable of hay production and permanent pasture use. The sixth is capable of sustaining unimproved pasture only, and the seventh class has no agricultural capability. http://www.omafra.gov.on.ca/english/landuse/classify.htm

36He also relied upon various newspaper clippings which reported a decline of home prices in North Bay.

37No comparable sales were presented by Mr. MacDonald. In cross examination he did not dispute the undepreciated cost value. He presented no evidence of inequity pursuant to s. 44(3)(b).

38The Board has not considered Mr. MacDonald’s references to Ombudsman Marin’s report on MPAC as it is not relevant to current value. Nor has it considered Mr. MacDonald’s communication only with the Associate Chair of the Board. This letter, which was not sent to all parties contrary to the provisions of Rule 8 of the Board’s Rules of Practice and Procedure was subsequently forwarded to the respondents for comments after the hearing. It has not been relied on as it was not relevant evidence on the issue of current value. Nor has the Board relied upon the 2019 decision, as it has been vacated.

Determination of Correct Current Value

The Land Area by Class of Soil

39In his report Mr. Adams indicated that he had visited the property on March 24, 2017 and March 8, 2018 but that on both occasions access to the property was limited due to snow and a No Trespassing sign. Mr. Adams testified in cross examination that he had measured the soil areas by land satellite cartography at 11 acres of fair farmland and seven acres of grazing. The overhead photographs in Mr. Adams’ report clearly delimit the Class 6 soil as the area that is heavily forested.

40Mr. MacDonald testified that 9 acres are productive land and the balance of 14 acres (5 acres) is a wetland creek and embankment from which he might get a crop one year out of 7.

41Mr. MacDonald testified he would class the remaining 146 acres of land as soil of no capability, as rock and forest. In his view it is Class 7 by the Canada Land Inventory and Ontario Classification.

42The Board finds, in the absence of more definitive measurements, and because the forested area is clearly defined in the photographs, that the area of Class 6 soil comprised of the forested area is sufficiently measured by the satellite cartography at 141.1 acres. As for the remaining 18.9 acres, Mr. Adams’ March inspection of the land, covered by snow, did not permit a delimitation of the class 2 and class 4 soil. Because of this the Board finds that Mr. MacDonald’s description of the topography and use of his land is more reliable. Accordingly, the Board finds that the area of Class 2 soil is 9 acres as testified to by Mr. MacDonald and the remaining area of 9.9 acres is Class 4 soil.

Time Adjustments

43The Board will not be using time adjustments in the analysis of sales. The 12.6-year time period of the study is too long to reliably adjust sales near the valuation date. Furthermore, there is no indication that the sales in the time study were s. 19(5) sales. The study reflects price changes in the entire market which might not be applicable to the farm market. While Mr. Adams did present evidence that across Canada agricultural land values have been generally increasing, his evidence was not specific enough to the area in question to support individual time adjustments in the subject property’s market area.

Analysis of Evidence for Per Acre Valuation

44Mr. Adams derived a value per acre of $2,639.47 for Class 1 soil from Sale 8, composed of Class 1 soil exclusively and a value per acre of the $1278.16 for Class 2 soil from sale 9, composed of Class 2 soil exclusively. He was however unable to derive a value for Class 4 and 6 soil, because as all the comparable sales contained multiple soil classes. He estimated the class 4 and 6 soil values to the precise rate per acre of $717.60 for Class 4 soil and a rate per acre of $236.50 for Class 6 soil.

45There is no sales evidence or any other evidence to support the estimation of these precise rates for Class 4 and 6 soil. His estimate of a rate for Class 6 is particularly problematic as applied to the 146 acres of land of the Subject Property.

46Because MPAC only classifies soil in 6 classes as opposed to 7 classes used by the Canada land inventory and the Ontario Ministry of Agriculture, Food and Rural Affairs (OMFRA) the value of land that would be otherwise be in Soil class 7, included in Soil class 6, is overvalued. The photographs show this area to be heavily forested. It is not, on Mr. MacDonald’s evidence “suitable for grazing” as required by Class 6. Yet in Mr. Adams’ opinion this unsubstantiated acreage rate is used to attribute $33,370.15 of a $53,098.96 land valuation.

47In the absence of more concrete evidence to support the estimated values of Class 4 and 6 soil and because a portion of the land does not meet the definition of Class 6 land used by MPAC because it is not suitable for grazing, the Board will determine the land value of the subject property by the use of a qualitative bracketed range of values.

Bracketed Range of Value

48The Board finds that Sale 7 is not comparable to the subject property as it composed exclusively of 24 acres of Class 4 soil. It contains no regularly cultivatable Class 1, 2 or 3 soil as does the subject property. Accordingly, it will not be considered for the bracketed range of value.

49The Board disagrees with Mr. Adams’ opinion that Sale 8 (18.19 acres of Class 1 only soil) is slightly inferior to the subject property. Sale 8 plainly has 9 acres more of productive cultivatable farmland than the subject’s 9 acres of Class 2 soil. Furthermore, the soil is of the highest quality Class 1. The Board disagrees that the difference of 142 acres of land with little agricultural potential on the subject property makes the subject property more attractive to a farmer than a doubling of higher quality soil.

50Though Sale 9 has more Class 2 soil than the subject property, Mr. acknowledged that this property, sold for $20,000, was of inferior value to his when he estimated a correct value for his property would be $32,000. Accordingly, the Board will use Sale 9 at $20,000 to set the lower range of the bracket. The lowest price for comparable superior land is Sale 8 at $55,000. This will be the higher side of the price bracket.

51The Board finds there is no specific factor which would tend to render the subject property closer to either end of the value bracket. Accordingly, the Board finds the land value to be $37,500, the midpoint of the $20,000 to $55,000 value bracket. To this value is added the depreciated cost of the buildings of $2,971.78, which Mr. MacDonald did not contest, to arrive at a correct current value of $40,500 (rounded).

Issue 2 - Is an equity reduction in the correct current value required?

52Mr. Adams’ evidence indicated that similar properties in the vicinity were assessed at 94.5% of their sales values. He acknowledged that this indicates an underassessment requiring an adjustment to the correct current value lowering the assessment to make it equitable with similar properties in the vicinity. The Appellant presented no evidence or submissions with respect to equity. Accordingly, the adjusted assessment will be $38,200. (rounded from $40,500 x0.945= $38,245.83).

CONCLUSION

53The Board finds that the correct January 1, 2016 current value of the subject property is $40,500. The Board finds that an equity adjustment pursuant s. 44(3)(b) of the Act, is required in the amount of $2,300. The Board concludes that adjusted assessment will be $38,200 for all years under appeal, including a deemed assessment for the 2021 taxation year.

ORDER

54The Board orders that:

1. The 2017 taxation year assessment be increased from $32,000 to $38,200.

2. The 2018 taxation year assessment be decreased from $54,000 to $38,200.

3. The 2019 taxation year assessment be increased from $11,000 to $38,200.

4. The 2020 taxation year assessment be increased from $11,000 to $38,200.

5. The 2021 taxation year assessment be increased from $11,000 to $38,200.

"Pierre R. Lavigne"

PIERRE R. LAVIGNE

MEMBER

Assessment Review Board

Website: www.tribunalsontario.ca/arb

Telephone: 416-212-6349 Toll Free: 1-866-448-2248

Appendix 1

Subject Property

Property #1

Property #2

Property #3

Roll Number

485211000111501

485211000105900

485211000107300

485206000138204

Address

0

DALCOURT RD

683 PIQUETTE RD

EUGENE RD

Neighbourhood

F009 - 2801

F009 - 2801

F009 - 2801

F009 - 2801

Property Code & Desc.

(210) Farm Without Residence - With Secondary Structures;

With Farm Outbuildings

(200) Farm Property Without Any Buildings/Structures

(200) Farm Property Without Any Buildings/Structures

(200) Farm Property Without Any Buildings/Structures

Distance in km

3.7634

4.2637

12.1425

Valuation

Current Value Assessment

$11,000

$94,000

$76,000

$91,000

Sale

Sale Date

20160803

20161221

20160817

Sale Amount

$75,000

$100,000

$115,000

Time Adjusted Sale Amount

$72,114

$94,175

$110,575

Time Adjusted Sale Ratio

1.3035

0.807

0.823

Site

Actual Site Area (Acres)

160

115.18

157

120.5

Farm Structure(s)

Structure Description

(203) Type Iii Uninsulated Barn

Year Built

1970

Building Total Area (SF)

2700

Quality of Construction

3

Height

12

Structure Description

(203) Type Iii Uninsulated Barn

Year Built

1980

Building Total Area (SF)

1000

Quality of Construction

3

Height

12

Structure Description

(203) Type Iii Uninsulated Barn

Year Built

1960

Building Total Area (SF)

2016

Quality of Construction

4

Height

10

Farmland

Farm Lands Class 1 Area

0

0

0

0

Farm Lands Class 2 Area

11

52

33.67

50.5

Farm Lands Class 3 Area

0

0

0

0

Farm Lands Class 4 Area

7.9

3.5

0

0

Farm Lands Class 5 Area

0

0

0

0

Farm Lands Class 6 Area

141.1

59.68

123.33

70

Subject Property

Property #4

Property #5

Property #6

Roll Number

485211000111501

485206000140302

520400000129900

520400000326600

Address

0

LAPLAGE RD

582 CASIMIR RD

826 NORTHERN CENTRALRD

Neighbourhood

F009 - 2801

F009 - 2801

F009 - 3002

F009 - 3002

Property Code & Desc.

(210) Farm Without Residence - With Secondary Structures;

With Farm Outbuildings

(200) Farm Property Without Any Buildings/Structures

(200) Farm Property Without Any Buildings/Structures

(200) Farm Property Without Any Buildings/Structures

Distance in km

15.549

15.6649

15.9384

Valuation

Current Value Assessment

$11,000

$141,000

$175,000

$93,000

Sale

Sale Date

20160426

20131220

20161118

Sale Amount

$205,000

$170,000

$80,000

Time Adjusted Sale Amount

$201,337

$196,441

$75,860

Time Adjusted Sale Ratio

0.7003

0.8909

1.2259

Site

Actual Site Area (Acres)

160

143.05

141.93

149.5

Farm Structure(s)

Structure Description

(203) Type Iii Uninsulated Barn

Year Built

1970

Building Total Area (SF)

2700

Quality of Construction

3

Height

12

Structure Description

(203) Type Iii Uninsulated Barn

Year Built

1980

Building Total Area (SF)

1000

Quality of Construction

3

Height

12

Structure Description

(203) Type Iii Uninsulated Barn

Year Built

1960

Building Total Area (SF)

2016

Quality of Construction

4

Height

10

Farmland

Farm Lands Class 1 Area

0

0

0

0

Farm Lands Class 2 Area

11

86.69

0

0

Farm Lands Class 3 Area

0

0

80

24

Farm Lands Class 4 Area

7.9

0

0

0

Farm Lands Class 5 Area

0

0

0

0

Farm Lands Class 6 Area

141.1

56.36

61.93

125.5

Subject Property

Property #7

Property #8

Property #9

Roll Number

485211000111501

520400000326900

485211000116055

485204000314912

Address

0

0

HIGHWAY 17

LEVAC RD

Neighbourhood

F009 - 2801

F009 - 3002

F009 - 2801

F009 - 2801

Property Code & Desc.

(210) Farm Without Residence - With Secondary Structures;

With Farm Outbuildings

(200) Farm Property Without Any Buildings/Structures

(200) Farm Property Without Any Buildings/Structures

(200) Farm Property Without Any Buildings/Structures

Distance in km

17.1595

2.2328

19.5791

Valuation

Current Value Assessment

$11,000

$59,000

$39,000

$29,000

Sale

Sale Date

20160610

20180216

20140623

Sale Amount

$50,000

$55,000

$20,000

Time Adjusted Sale Amount

$48,414

$48,012

$22,240

Time Adjusted Sale Ratio

1.2186

Site

Actual Site Area (Acres)

160

79.75

18.19

17.4

Farm Structure(s)

Structure Description

(203) Type Iii Uninsulated Barn

Year Built

1970

Building Total Area (SF)

2700

Quality of Construction

3

Height

12

Structure Description

(203) Type Iii Uninsulated Barn

Year Built

1980

Building Total Area (SF)

1000

Quality of Construction

3

Height

12

Structure Description

(203) Type Iii Uninsulated Barn

Year Built

1960

Building Total Area (SF)

2016

Quality of Construction

4

Height

10

Farmland

Farm Lands Class 1 Area

0

0

18.19

0

Farm Lands Class 2 Area

11

0

0

17.4

Farm Lands Class 3 Area

0

0

0

0

Farm Lands Class 4 Area

7.9

40

0

0

Farm Lands Class 5 Area

0

0

0

0

Farm Lands Class 6 Area

141.1

39.75

0

0