Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

August 09, 2021

FILE NO.:

WR 172692

Assessed Person(s):

Stephen Pearson Carlin and Catherine Anne Carlin

Appellant(s):

Stephen Pearson Carlin and Catherine Anne Carlin

Respondent(s):

Municipal Property Assessment Corporation Region 30

Respondent(s):

Township of Assiginack

Property Location(s):

122 Eastview Lane

Municipality(ies):

Township of Assiginack

Roll Number(s):

5111-000-003-07300-0000

Appeal Number(s):

3422256, 3432676 and 3449129

Taxation Year(s):

2019, 2020 and 2021

Hearing Event No.:

745378, 751365

Legislative Authority:

Sections 34 and 40 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties

Representative

Stephen Carlin

Self-represented

Municipal Property Assessment Corporation

Andrew Doble

Township of Assiginack

No one appeared

HEARD:

June 10, 2021 and July 27, 2021 by telephone conference call

ADJUDICATOR(S):

Caroline King, Vice-Chair

DECISION

OVERVIEW

1Stephen and Catherine Carlin (the “Appellants”) own the seasonal waterfront property located at 122 Eastview Lane in the Assiginack Township (the “Appellants’ Property”). In 2019 the property was assessed as vacant land. The Appellants built a residence on the property in 2019.

2The Appellants appeal the Municipal Property Assessment Corporation’s (“MPAC”) supplementary assessment for 2019 (pertaining to their new residence), and MPAC’s $533,000 assessed value of their seasonal waterfront property located at 122 Eastview Lane in the Assiginack Township for the 2020 and 2021 taxation years. The Appellants agree with the use of the direct comparison sales approach to valuation in theory, but due to the limited number of sales nearby to the Appellants’ Property and MPAC’s high level of appraisal to Assessment to Sale Ratio (“ASR”), the Appellants assert that the better approach to valuation is based on the adjusted assessed values of nearby sale properties resulting in a value of approximately $420,000.

3MPAC asserts that $503,000 is the correct current value of the Appellants’ Property based on a direct comparison approach, and further an assessment of data confirmed there should be no adjustment for equity. The Appellants assert this valuation is too high and that the correct current value is $420,000.

4The Appellants’ position about equity related to the properties included in MPAC’s Valuation Report and Equity Report. The Appellants agreed that MPAC’s Level of Appraisal confirmed reliable assessments.

5The parties agreed how to calculate the section 34 supplemental assessment and agreed that the effective date of the supplemental assessment is September 2, 2019.

Issues for the Hearing

6At issue in this proceeding is:

a. What is the most appropriate approach to determine the correct current value for the Appellants seasonal residential property?

b. What is the correct current value for the Appellants’ Property for the 2020 and 2021 taxation years?

c. What is the correct value for the 2019 supplemental assessment?

d. Should an equity reduction in the current value should be made?

Result

7The most appropriate approach to determine the correct current value for the Appellants’ seasonal residential property is the direct comparison approach.

8The correct current value of the Appellants’ Property for the 2020 and 2021 taxation years is $468,000.

9The correct current value regarding the 2019 supplemental assessment is $395,000. The effective date of the supplement assessment is September 2, 2019.

10No reduction for equity is required.

ANALYSIS

Description of Subject Property

11122 Eastview Lane is a waterfront detached residential property in Assiginack Township with a seasonal access road. It is located on the eastern portion of Manitoulin Island in a rural area with mixed use properties. The property includes a 2019 built 2,638 square foot house. The range of comparable properties is limited by the limited number of sales in this rural area (especially with such a new build).

12The assessed value of the Appellants’ Property for the 2020 and 2021 taxation years was $533,000. Subsequently MPAC’s corrections in the measure of the Appellants’ residence resulted in a reduction to a $503,000 value.

Issue 1 – What is the most appropriate approach to determine the correct current value for the Appellants’ seasonal residential property?

13The challenge in this case, as in many seasonal or cottage properties is that there are few sale properties which are directly comparable to the Appellants’ Property. Since the Appellants’ agree that MPAC’s level of Appraisal to ASR is very impressive at 1.003, the Appellants’ assert that use of appraised values is a more accurate way to determine the current value of their property.

14As confirmed by the Divisional Court in Municipal Property Assessment Corp. v. Inmet Mining Corp., 2002 CanLII 7325 (ON SCDC), “… there are no legislated guidelines setting out specific valuation concepts.” In Manufacturer’s Life Insurance Company v. British Columbia (Assessor of Area No. 9 – Vancouver), an unreported decision of The British Columbia Supreme Court dated October 15, 1996, Mr. Justice Melnick stated at paragraph 14:

“It appears to be well-settled that the Board’s choice of appraisal method is a question of fact….”

15I have considered the Appellants approach to valuing their property which is based on the assessed values of nearby properties, with adjustments based on the Appellants own estimates and experience of cost.

16The Appellants have made considerable and careful effort to provide an estimate of current value derived principally from the assessed value of nearby properties with the Appellants self-determined adjustments made to acknowledge differences in the nearby properties compared to the Appellants’ Property. The adjustments are based on the Appellants’ own estimates of costs of certain elements such as the Appellants $8,000 estimated cost to build a bathroom or $35,000 cost of materials for building a garage and estimated $40,000 cost for an indoor swimming pool. The Appellants also applied a $4,000 per year adjustment for age (up to a maximum of $60,000). This adjustment appeared to be based on the best guess of the Appellants’ and was not based on any industry recognized metric or market data.

17The object of the valuation is to determine how the market would treat the Appellants’ Property if sold in an arm’s length sale on January 1, 2016 by a willing seller to a willing buyer.

18The production cost of elements such as bathrooms, garages, indoor pools does not necessarily reflect the market treatment of such elements, nor does the cost for an individual project necessarily reflect average cost. The Appellants’ adjustment for age is problematic. It is not based on any industry recognized metric (which could be said to be based on large amounts of aggregate data tested in the competitive marketplace over time).

19In my opinion, there should be compelling reasons supported by reliable data to deviate from one of the accepted three approaches to value as there should be consistency and uniformity in approach.

20This is not the case here. While the Appellants have provided a careful analysis, there is no market testing and/or industry accepted framework or metric for their adjustments. Further, the Appellants’ approach is based in part on costing. Cost is reflective of a production value and does not necessarily correlate to market exchange value. I find the Appellants approach to value based on assessed values with the Appellants self-determined costs and adjustments to be critically flawed. As the evidence submitted was sufficient to determine a current value, and the Appellants’ valuation approach is critically flawed, there is no compelling reason to deviate from one of the accepted three approaches to value.

21Appraisal theory is not a precise science, but it has been market and industry tested for a long time. It can be said that modern real estate appraisal theory dates back to the early 20th century. The three approaches to value have traditionally been: 1) the Direct Sales Comparison Approach; 2) the Income Capitalization Approach; and 3) the Cost Approach. The Appraisal Institute of Canada, courts and the Assessment Review Board have all recognized and relied upon these three approaches to value which has been developed, used, and tested the markets and by professionals.

22Based on my finding that the Appellants’ approach to valuation is critically flawed, and based on the fact that I find, (for the reasons provided below), that MPAC’s sale properties provide sufficient data to evaluate the appropriate range of value for the Appellants’ Property, based on the market and litigation tested Direct sales approach, I find the Direct Sales Approach to the appropriate approach to be applied in this case.

Issue 2 – What is the correct current value for the Appellants’ Property?

23MPAC presented data on the sale of six properties located on Manitoulin Island. The Appellant did not present sales evidence for any comparable properties.

24The Appellants’ Property and MPAC’s six proposed comparable properties are all single-family detached residences with an average structure condition code, located on Manitoulin Island, and none of them have air conditioning. Apart from the Appellants’ Property, all the other properties have garages. Property No. 1 (39 Maple Lane) has an attached garage, the rest have detached garages. Only the Appellants’ Property and Property No. 1 have forced air heating, the rest have electric heat. While there is not a high degree of comparability to the Appellants’ Property, (which is not unusual for a seasonal new build located in rural area), there is sufficient degree of comparability for me to base an analysis on. Even if I find that MPAC had not meet its burden of proof, the Board is required by law to determine the current value. Municipal Property Assessment Corporation v. Zarichansky, 2020 ONSC 1124.

25At the hearing the parties all agreed that five of the properties were inferior to the Appellants’ Property, and that the Property No. 1 was superior.

26As there are both superior and inferior properties to the Appellants’ Property, I am able to determine the probable range of value for the Appellants’ Property by considering the degree of similarity with the sale properties. Factors to be considered when assessing the degree of similarity for residential properties includes location and physical characteristics of buildings. In general waterfront properties close to amenities with year-round property access will sell for more money than waterfront properties farther away from amenities with seasonal property access. Properties with larger buildings will sell for more money than properties of with smaller buildings. Newer buildings generally sell for more money than older buildings. By considering these factors, I am not “anchoring” the value of the Appellants’ Property to one specific property, rather I am reviewing the degree of similarity with all the sale properties and determining where in the bracketed range of value most appropriately represents the market value of the Appellants’ Property.

MPACs Proposed Six Comparable Properties

27For ease of comparison, the table below sets out many details of the properties MPAC identified in their analysis. The valuation date for these appeals is January 1, 2016, therefore specific details are set out about the sale date and sale price for these properties.

Appellants’ Property

Property 1

Property 2

Property 3

Property 4

Property 5

Property 6

Address

122 Eastview Lane

39 Maple Lane

124 North Oakcliff Drive

1201 Parkinson Lane North

118 Eastview Lane

102 Eastview Lane

1134 Bay Estates Road

Neighbourhood

W10 - 471

W06 - 472

W06 - 472

W06 - 472

W10 - 471

W10 - 471

W23 - 471

Distance in KM

11.9578

14.1022

19.7196

0.0401

0.0862

9.378

Valuation: CVA

$503,000

$500,000

$388,000

$358,000

$247,000

$212,000

$200,000

Sale Info:

Sale Date:

2016-11-18

2016-06-01

2015-06-30

2015-07-01

2015-04-30

2015-08-21

Sale Amount:

$499,000

$345,000

$415,000

$283,000

$285,000

$242,500

Time Adjusted Sale Amount:

$490,207

$341,788

$419,659

$285,684

$289,199

$244,378

Time Adjusted Sale Ratio:

1.02

1.1352

0.8531

0.8646

0.7331

0.8184

Site:

Effective Frontage (F)

167

150

176.87

189.14

99.74

200

100.52

Effective Site Area (Acres)

2.47

1.42

0.86

0.3

1.48

2.96

0.65

Access:

Seasonal Access

Year Round

Year Round

Seasonal Access

Seasonal Access

Seasonal Access

Year Round

Residential Structure:

Effective Year Built

2019

2012

1990

1984

1994

1979

1979

Quality of Construction

6.5

6.5

6

6

5

5

5

Appellants’ Property

Property 1

Property 2

Property 3

Property 4

Property 5

Property 6

Residential Structure:

Full Storeys

1 3/4

1

1

1

2

1 1/4

1

Bedrooms

3

3

3

3

4

3

3

Bathrooms

2.5

2.5

2

2.5

1

1.5

1

Heating Type

Forced Air

Forced Air

Electric

Electric

Electric

Electric

Electric

Building Total Area (SF)

2,690

1,457

1,249

1,259

1,678

952

892

First Floor Area (SF)

1,786

1,457

1,249

1,259

839

672

892

Second Floor Area (SF)

904

n/a

n/a

n/a

839

280

n/a

Secondary Structures

Structure Description

No Garage

Attached Garage

Detached Garage

Detached Garage

Detached Garage

Detached Garage

Detached Garage

Year Built

2012

1990

2007

1997

1986

2005

Building Total Area (SF)

296

576

756

576

336

268

28As can be seen from the table above, the Properties No. 4, 5 and 6 most proximate to the Appellants’ property have much older and significantly smaller buildings with a lower quality of construction. I find they are inferior to the Appellants’ Property. While Property No. 5 is closest in lot size to the Appellants’ lot, the 1979 effective year built and 952 square foot size (which is 1,738 square feet smaller that the Appellants’ building) combine the make it significantly inferior to the Appellants’ Property, even when factoring in the additional garage structure.

29The Appellants’ Property is worth significantly more than Property No. 4 and 5 which are most proximate, and is worth and significantly more than Property No. 6 which while having year round access to the property has a very small and old residence on a small lot with much less waterfront frontage compared to Appellants’ Property. The time adjusted sale amount for these properties range from $244,378 to $289,199.

30The Appellants’ Property is also worth more than Property No.2 and 3. Properties No. 2 and 3, which are farther away and have significantly older and smaller buildings, on significantly smaller lots sizes when compared to the Appellants’ Property. Even when factoring in the additional garage structure, location, when considering all factors combined, I find these properties to be inferior to the Appellants’ Property. The time adjusted sale amount for these properties was respectively $341,788 and $419,659.

31Property No. 1 has year-round access and is located in a premium area proximate to desirable amenities compared to the location of the Appellants’ Property which has seasonal access only. While Property No. 1 building size is significantly smaller, and seven years older, when all factors are combined, including the additional attached garage, the parties agreed at the hearing that Property No. 1 was superior to the Appellants’ Property. Based on the uncontested evidence, regarding the market value of the location and the year-round access to Property No. 1, and all other factors considered, I find that the Property No. 1 is superior to the Appellants’ Property.

32The range for the value of the Appellants’ Property must fall between $419,659 (which is the time adjusted sale price of inferior Property No. 3) and $490,207 (which is the time adjusted sale price for superior Property No. 1). I find that the value of the Appellants’ Property must be slightly closer in value to Property No. 1 as the effective year build, quality of build, and lot size of the Appellants’ Property is more similar Property No. 1 than inferior Property No. 3.

33I determine that the current value for the Appellants’ Property is $468,000.

Issue 3 – What is correct value for the 2019 supplemental assessment?

34At the hearing, the parties agreed that the 2019 supplemental assessment for the Appellants’ new seasonal residence should be based on the correct current value of the entire property, less the $73,000 assessed land value returned on the rolls for 2019.

35The parties also agreed that the effective date of the supplemental assessment should be September 2, 2019 in accordance with the Property Assessment Change Notice.

36I find the correct value for the 2019 supplemental assessment for the new residential build to be $395,000 ($468,000 current value for the total property less $73,000 land value) and confirm that the effective date for this supplemental assessment is September 2, 2019.

Issue 4 – Should an equity reduction in the current value should be made?

37The Appellants did not present any evidence supporting a reduction of the current value for the purposes of an equitable assessment. The Appellants asserted that MPAC had not determined the fair market value of their Property because it used comparable sales outside a 2 kilometre radius which, according to the Appellants resulted in an inequitable assessment. The Appellants agreed that the assessed values were close to the sale values.

38MPAC’s equity analysis compared the assessments of 26 waterfront properties to their respective, time adjusted sale values. I note that the properties used in this analysis were from a broader area, which is permissible when conducting an equity analysis. The result of MPAC’s analysis indicated a median ASR of 1.003. This indicates that, among the 26 properties used in the sample, their respective assessments were very close to their current value.

39While the Appellants presented an argument about equity, their argument was really focused on the degree of comparability used to determine current value. The only evidence I had before me on the issue of equity, was MPAC’s evidence. I note that both the Appellants and MPAC agreed that the assessments were very close to the current value, and find that there is no evidence to support a reduction in the current value determined when reference is made to the assessments of similar lands in the vicinity.

CONCLUSION

40After applying the most appropriate valuation approach, I find the current value of the Appellants’ Property is $468,000. The value for the 2019 supplemental assessment is $395,000. I find there is no evidence to support a reduction in this value when reference is made to the assessments of similar properties in the vicinity.

ORDER

41It is ordered that the assessment of 122 Eastview Lane is reduced to $468,000, in the Residential property class for the 2020 and 2021 taxation years.

42It is ordered that the supplemental assessment for the 2019 taxation year is $395,000 with an effective date of September 2, 2019.