Marlene Sculati v. Municipal Property Assessment Corporation Region 17, 2022 CanLII 15791

Assessment Review Board

Tribunals Ontario Tribunaux décisionnels Ontario Assessment Review Board Commission de révision de l’évaluation foncière

ISSUE DATE: March 03, 2022

FILE NO.: WR 176143

Assessed Person(s): Marlene Ruth Sculati

Appellant(s): Marlene Sculati

Respondent(s): Municipal Property Assessment Corporation Region 17

Respondent(s): Township of Muskoka Lakes

Property Location(s): 1009 Hurling Point Road, Unit 4

Municipality(ies): Township of Muskoka Lakes

Roll Number(s): 4453-070-001-08200-0000

Appeal Number(s): 3451663

Taxation Year(s): 2021

Hearing Event No.: 756964

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

APPEARANCES:

Parties	Representative
Marlene Sculati	Robert Baranowski
Municipal Property Assessment Corporation	Mauro Pistillo
Township of Muskoka Lakes	No one appeared

HEARD: January 27, 2022 by telephone conference call

ADJUDICATOR(S): Jennifer Griffith, Member

DECISION

OVERVIEW

1Marlene Ruth Sculati (the “Appellant”) is the owner of 1009 Hurling Point Road, Unit 4 (the “Subject Property”) in the Township of Muskoka Lakes (the “Township”). The Appellant filed an appeal for the returned assessment of $318,000 for the 2021 taxation year with the Assessment Review Board (the “Board”), pursuant to s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”).

2Pursuant to s. 19(1) of the Act, the assessment of land shall be based on its current value; and s. 19.2(1)4 provides that, for the 2017 to 2021 taxation years, MPAC is required to assess this value as of the valuation date, January 1, 2016.

3It is the Appellant’s position that Municipal Property Assessment Corporation (“MPAC’s”) current value assessment (“CVA”) is too high and that the correct current value should be $244,000 based on sales. MPAC takes the position that the correct current value based on sales should be $383,000. However, MPAC is not seeking a higher assessment and believes that the revised returned assessment of $301,000 is fair.

4Pursuant to s. 40(11) of the Act, the municipality in which the land is located is a party to this proceeding; however, no one appeared on behalf of the Township.

5Pursuant to s. 44(3)(b) of the Act, MPAC takes the position that an equitable reduction of the current value is not required. The Appellant asserts that equity is not at issue. As the onus to demonstrate that an equitable reduction is required rests with the Appellant, the Board accepts the Appellant’s assertion that equity is not at issue.

Issues for the Hearing

6At issue in this proceeding is:

1. What is the determination of the current value of the Subject Property for the 2021 taxation year based on a direct comparison approach?

Result

7The Board finds the correct current value of the Subject Property is $336,000 as of the valuation date January 1, 2016, which is applicable to the 2021 taxation year for the reasons set out below. MPAC is not seeking an increase in assessment, therefore, the Board will not increase the returned assessment.

8The Board also finds that equity pursuant to s. 44(3)(b) is not at issue and no further reduction is required.

9Therefore, the Board orders that the returned assessment of $318,000 be reduced to the revised returned assessment of $301,000 for the 2021 taxation year.

ANALYSIS

Description of the Subject Property

10The Subject Property is a seasonal and recreational waterfront residential dwelling, Property Code 391, located in the homogenous neighbourhood identified as (I10) also known as the Moon River. The Subject Property has a total lot size of 0.28 acres, effective waterfront of 55 feet, originally built in 1930, effective year built 1964 due to renovations and addition in 1992, with a total building area of 835 square feet (“sq. ft.”) exclusive of porches and a quality of construction rating of 5.

Issue 2 - What is the determination of the current value of the Subject Property for the 2021 taxation year based on a direct comparison approach?

Direct Comparison Approach Based on Sales

11The Direct Comparison Approach estimates the market value by comparing the sale prices of similar properties (in terms of lot size, total building area, year built, quality of construction etc.) that have sold within a reasonable timeframe of the valuation date to the Subject Property. In this case the valuation date is January 1, 2016.

12In determining the correct current value, the Board references s. 19(1) of the Act, which states that the assessment of land shall be based on its current value, which is defined as 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”.

13For the reasons discussed below, the Board finds the correct current value at the valuation date of January 1, 2016, is $336,000.

14MPAC and the Appellant provide evidence based on the Direct Comparison Approach. Reviewing the evidence in support of current value, the Board finds three sales presented by both MPAC and the Appellant to be the best evidence of current value as determined below by the Board.

MPAC’s Evidence in Support of Current Value

15Mauro Pistillo, MPAC’s Representative called Brooke Atkins, as a witness (“MPAC’s Witness”) and she presented a Valuation Report dated July 12, 2021, which she prepared and testified to the information contained in the report.

16MPAC’s Witness states that the original 2016 CVA was returned at $318,000 and it was revised to $301,000 because the waterfront was changed from 79.67 feet to 55 feet after a site inspection on August 3, 2021. MPAC’s Witness states that the impact of this change on the assessed value is $17,000.

17In support of current value, MPAC’s Witness presents the following four proposed comparable properties, which sold in 2015, 2016 and 2017 in the same neighbourhood as the Subject Property (I10). She provides both the actual and time-adjusted sale prices; however, she relies on the time-adjusted sale prices in her analysis, utilizing the Direct Comparison Approach to value. The following Table 1 is an analysis of the four suggested comparable properties:

Table 1

MPAC’s Sales Analysis

4 SUGGESTED COMPARABLE PROPERTIES	FRONTAGE (ft.)	LOT SIZE (acre)	TOTAL BUILDING AREA (sq. ft.)	QUALITY RATING	YEAR BUILT	SALE DATE	SALE PRICE	SALE PRICE (time adjusted)	SALE PRICE (time adjusted per sq. ft.)
1009 Hurling Point Road, Unit 14	60	0.17	894	5	1935	2016	$490,000	$468,146	$523.65
1016 Kimberley Point Road, Unit 3	75	0.56	1,068	4	1912	2015	$330,000	$336,736	$315.29
1009 Hurling Point Road, Unit 6	115	0.37	1,332	5	1930	2017	$462,500	$430,891	$323.49
1010 Centre Avenue	50	0.28	1,352	5	1924	2016	$333,000	$323,647	$239.38
Median	67.50	0.325	1,200	5	1927	2016	$397,750	$383,813	$319.39
Subject Property	55	0.28	835	5	1930	NIL	N/A	N/A	N/A

18Based on the above analysis MPAC’s Witness testifies that two of the above proposed comparable properties are superior and two are inferior to the Subject Property and are located at:

• 1009 Hurling Point Road, Unit 14 is superior, because of larger frontage, newer effective year built, and with two secondary structures (cabins);

• 1009 Hurling Point Road, Unit 6 is superior to the Subject Property because of larger effective waterfront, larger total building area and 593 sq. ft. of finished basement;

• 1016 Kimberley Point Road, Unit 3 is inferior to the Subject Property, because it was built in 1924 and was never renovated, and with lower quality class rating 4; and

• 1010 Centre Avenue has some similar characteristics to the Subject Property, however, MPAC’s Witness is of the opinion that this proposed comparable property is inferior, because it has a cliff type topography, whereas the Subject Property’s topography is a slight slope and is a two-storey structure.

19On cross-examination, MPAC’s Witness testifies that the sale prices of the proposed comparable properties were not adjusted for differences in characteristics. Instead, she bracketed the time adjusted sale prices of the two superior comparable properties and the two inferior comparable properties and is of the opinion that the median time adjusted sale price of $383,000 represents the best evidence of current value.

20MPAC’s Witness argues that due to differences in characteristic of these four proposed comparable properties her opinion of current value is based on bracketing the four sales to determine current value, as opposed to using the time adjusted rate per sq. ft. when properties are similar. In support of this argument, MPAC’s Witness cited two cases, the most relevant of which will be cited below in the Board’s findings of the correct current value:

• 1210299 Ontario Inc. v Municipal Property Assessment Corporation, Region 15, 2019 CanLII 18811 (ON ARB) (“1210299 Ontario”) paragraph 44; and

• Channell v Municipal Property Assessment Corporation, Region 17, 2021 CanLII 61413 (ON ARB) (“Channell”) paragraph 33 and 35.

Appellants’ Evidence in Support of Current Value

21Robert Baranowski is the Appellant’s Representative, and he acts as both representative and witness.

22The Board’s Rules of Practice and Procedure (“Rules”), Rule 14 states that a Representative who is licensed by the Law Society of Ontario as a paralegal or lawyer may appear at a hearing event as both an advocate and a witness:

(a) in a summary proceeding before the Board; or

(b) in a general proceeding with leave of the Board.

23In support of current value, the Appellant’s Representative presents a copy of his Statement of Issues containing two proposed comparable properties located at 1016 Kimberley Point Road, Unit 3, sold in 2015 for $330,000; and 1521 Moon River Road, sold in 2016 for $430,000.

24At today’s hearing the Appellant’s Representative advised the Board that he is no longer relying on the sale at 1521 Moon River Road. The Appellant’s Representative submits that he is now presenting the sales of three proposed comparable properties which are analyzed below in Table 2:

Table 2

Appellant’s Sales Analysis

3 SUGGESTED COMPARABLE PROPERTIES	FRONTAGE (ft.)	LOT SIZE (acre)	TOTAL BUILDING AREA (sq. ft.)	QUALITY RATING	YEAR BUILT	SALE DATE	SALE PRICE	SALE PRICE (time adjusted)	SALE PRICE (time adjusted per sq. ft.)
1016 Kimberley Point Road, Unit 3	75	0.56	1,068	4	1912	2015	$330,000	$336,736	$315.29
1009 Hurling Point Road, Unit 6	115	0.37	1,332	5	1930	2017	$462,500	$430,891	$323.49
1010 Centre Avenue	50	0.28	1,352	5	1924	2016	$333,000	$323,647	$239.38
Average	80	0.40	1,251	4.7	1922	2016	$361,758	$363,758	$292.72
Subject Property	55	0.28	835	5	1930	NIL	N/A	N/A	N/A

25The above analysis shows that these three proposed comparable properties have on average a frontage of 80 ft., a lot size of 0.28 acres, a total building area of 1,251 sq. ft., a quality rating of 5 and sold at a time adjusted sale price of $292.72 per sq. ft. based on total building area. When the average time adjusted sale price per sq. ft. is applied to the Subject Property it results in a value of $244,000 rounded ($292.72 x 835 sq. ft. based on total building area).

26Based on the above analysis, the Appellant’s Representative is of the opinion that the current value is $244,000.

27The Appellant’s Representative argues that current value based on median time adjusted sale price determined by the method of bracketing is incorrect. It is his opinion that the appropriate methodology should be based on the time adjusted sale price per sq. ft. because the comparable properties are similar to the Subject Property. In support of this argument the Appellant’s Representative also cited 1210299 Ontario decision, paragraph 44.

Finding of Current Value of the Subject Property for the 2021 taxation year

28Reviewing the evidence presented in support of current value, the Board finds the best evidence are three sales presented by MPAC and the Appellant (two sales by both MPAC and the Appellant, and one sale by MPAC) which occurred in 2015 and 2016 in the same homogeneous neighbourhood as the Subject Property. These three sales are located at 1009 Hurling Point Road, Unit 14, sold at a time adjusted sale price of $468,146, 1016 Kimberley Point Road, Unit 3, sold at a time adjusted sale price of 336,736, and 1010 Centre Avenue, sold at a time adjusted sale price of $323,647. The time adjusted sale prices range from $323,647 to $468,146 with a median sale price of $336,736.

29These three comparable properties have a median frontage of 60 ft., a median lot size of 0.28 acres, a median total building area of 1.068 sq. ft., median year built 1924 and a median quality of construction rating 5. This is compared to the Subject Property with a frontage of 55 ft., a lot size of 0.28 acres, total building area 835 sq. ft., year built 1930 and a quality of construction rating 5.

30The Board finds that although these three comparable properties are similar property type (waterfront properties), there are many differences in characteristics to the Subject Property such as (cabins, finished basement, topography (cliff versus slight slope), frontage, total building area) which impacts the value these comparable properties positively and/or negatively. However, the Board finds that there is no quantitative evidence before it to justify any adjustments to make these comparable properties similar to the Subject Property.

31The Board finds that these three comparable properties are not sufficiently similar to the Subject Property and did not rely on the time adjusted sale price per sq. ft. Instead, the Board determines that the Subject Property would likely sell at the median time adjusted sale price of $336,736 which is determined by the method of bracketing the sale prices from lowest to highest and the median is the mid-point of the sale prices. This finding is supported by 1210299 Ontario paragraph 44 which states:

In my determination of current value, I have analyzed the parties’ evidence using both bracketing and sale values on a square foot basis. Bracketing is a very good method for comparing properties in the direct sales approach when very few properties are provided in evidence that can be considered directly comparable. Bracketing is based on the general principle that a comparable property that has superior attributes to the subject will sell for more, those that have similar attributes will sell for similar amounts, and inferior attributes will sell for less.

This finding is also supported by Channell paragraph 33 and 35 which states:

Paragraph 33

Based 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.

Paragraph 35

… At paragraph 25 of Reid v. Municipal Property Assessment Corp., Region No. 7, [2014] O.A.R.B.D. No. 485 the Board stated:

25While 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.

32The Board also accepts MPAC’s testimony that the returned assessment of $318,000 is revised to $301,000 based on an adjustment of $17,000 for a correction to the frontage of the Subject Property from 79.67 ft. to 55 ft.

33Based on the above evidence, the Board finds the current value is $336,000 rounded. This current value represents the best evidence of arm’s length transaction between a willing seller to a willing buyer pursuant to s. 19(1) of the Act.

34Regarding MPAC’s proposed comparable property at 1009 Hurling Point Road, Unit 6, sold in 2017, the Board did not rely on this sale and finds it too far removed from the valuation date of January 1, 2016, to be a true test of current value. Instead, the Board relies on the sales which occurred closer to the valuation date in 2015 and 2016 as being a more reliable test of current value.

35In reviewing the three sales presented by the Appellant (also presented by MPAC) at 1016 Kimberley Point Road, Unit 3, sold in 2015 at a time adjusted sale price of 336,736, 1007 Hurling Point Road, Unit 6, sold in 2017 at a time adjusted sale price of $430,891, and 1010 Centre Avenue, sold in 2016 at a time adjusted sale price of $323,647, the Board rejects the current value of $244,000 determined by the average time adjusted sale price of $292.72 per sq. ft. because these three proposed comparable properties are found by the Board to be not sufficiently similar to the Subject Property. As stated above the Board relies on the median time adjusted sale prices of the sales of the three comparable properties, sold in 2015 and 2016 taxation years.

36Also stated above the comparable property at 1007 Hurling Point Road, Unit 6, sold in 2017, was not relied on by the Board because the sale date is too far removed from the valuation date to be a true test of current value.

CONCLUSION

37The Board finds the correct current value for the Subject Property at the valuation date is $336,000. However, MPAC is not seeking an increase in assessment, therefore, the Board will not increase the returned assessment for the 2021 taxation year.

38The Board also finds that equity pursuant to s. 44(3)(b) is not at issue and no further reduction is required.

ORDER

39The Board orders that the returned assessments of $318,000 be reduced to the revised returned assessment of $301,000 for the 2021 taxation year.