1170367 Ontario Inc v. Municipal Property Assessment Corporation Region 18, 2022 CanLII 1607

Tribunals Ontario - Assessment Review Board

ISSUE DATE: January 10, 2022

FILE NO.: WR 173894

Assessed Person(s): 1170367 Ontario Inc

Appellant(s): 1170367 Ontario Inc; Gordon Baker

Respondent(s): Municipal Property Assessment Corporation Region 18

Respondent(s): City of Port Colborne

Property Location(s): Forkes Road East

Municipality(ies): City of Port Colborne

Roll Number(s): 2711-040-005-22412-0000

Appeal Number(s): 3242831, 3334872, 3309295, 3362948, 3407833, and 3446640

Taxation Year(s): 2017, 2018, 2019, 2020 and 2021

Hearing Event No.: 749264 and 756564

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

APPEARANCES:

Parties	Counsel/Representative*
1170367 Ontario Inc; Gordon Baker	Self-represented
Municipal Property Assessment Corporation	Rachel Lethbridge*
City of Port Colborne	No one appeared

HEARD: September 15, 2021 and November 30, 2021 by telephone conference call

ADJUDICATOR(S): Pierre R. Lavigne, Member

DECISION

OVERVIEW

11170367 Ontario Inc. and Gordon Baker (“the Appellants”) appealed the assessment of the Subject Property for the 2017 taxation year because they claim the assessment is too high.

Background

2The assessment was returned on the assessment roll for the 2017 taxation year at $2,031,000. This assessment was appealed under s. 40(1)(a)(i) of the Assessment Act, R.S.O. 1990, c. A.31 (“Act”). Under s. 40(26) of the Act appeals were deemed to have been made for the 2018 to 2021 taxation years.

3The assessment for the 2018 taxation year was also initially returned at $2,031,000. Under s. 32 of the Act a corrected assessment was issued for $1,552,000. This s. 32 corrected assessment was also appealed under s. 40(1)(a)(i) of the Act as incorrect because it was too high.

4In this hearing, the Municipal Property Assessment Corporation (“MPAC”) submits that the correct current value of the Subject Property was $1,094,000. The Appellants submitted, in his initial pleadings, that the correct current value was $0. In his evidence he modified this position, as will be detailed below.

Description of Subject Property

5The Subject Property is an irregular parcel of 256.63 acres comprised of two portions:

1. 88.33 acres of the Babion Woods Wetland Complex, a Provincially Significant Conservation Land (the “Wetland”);
2. 168.3 acres of remaining land comprised of: a. 81.47 acres of Niagara Woodland (the “Woodland”), municipally zoned for Environmental Protection; and b. 86.83 acres of other land (the “Other Land”)

6The Subject Property has no buildings or structures other than hydro towers and transmissions lines which traverse the Woodland and the Other Land.

Issues for the Hearing

7At issue in this proceeding:

1. A determination of the current value of the Subject Property.
2. The classification of the Subject Property.
3. Whether an equity adjustment in the current value should be made under s. 44(3)(b) of the Act?

Result

8The Assessment Review Board (the “Board”) finds that the correct current value of the Subject Property for taxation in the 2017 to 2021 taxation years is $499,000.

9The Board finds that for the 2017 and 2018 taxation years the correct current value is apportioned at $139,800 as Eligible Conservation Land (Exempt) and $359,200 to the Commercial Property Class.

10The Board finds that for the 2019, 2020 and 2021 taxation years, the correct current value is $499,000 and the correct classification is: Commercial Property Class.

11The Board makes no equity adjustment under s. 44(3)(b) of the Act.

ANALYSIS

Issue 1 – The determination of the correct current value of the Subject Property

The Governing Statutory Provisions

12Section 19(1) of the Act requires that “the assessment of land shall be based on its current value”.

13Section 1(1) of the Act defines current value as follows:

current value means, 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.

14Section 14(5) of the Act requires that if portions of the Subject Property are in different classes of real property, MPAC shall determine the share of value attributable to each class and apportion the value accordingly on the assessment roll.

15Section 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 years. Section 48.6 of Ontario Regulation (“O. Reg.”) 282/98 extended this valuation day to the 2021 taxation year.

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

17Section 44(3)(b) of the Act requires an equitable reduction in the correct current value if the correct current value is determined to be inequitable compared to similar lands in the vicinity.

MPAC’s Position

MPAC valuation of the Wetland

18Kailie Pyott, a property valuation specialist with MPAC, testified on behalf of MPAC. Ms. Pyott valued the Wetland as equivalent to farmland, using the MPAC mineral soil Classes. Class 1 is the best soil, Class 6 is the worst. Classes 1-3 are considered good farmland. She estimated the Wetlands as soil Class 5: “The 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.” Using a Class 5 soil rate of $1,582.78 per acre for the 88.33 acres of Wetland, she derived a value of this portion of the Subject Property of $139,807.

MPAC valuation of the Woodland

19Ms. Pyott valued the Woodland as equivalent to farmland, using the MPAC soil Class 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.” Using a Class 4 soil rate of $2,134.11 per acre for these 81.47 acres she derived a value of this area of $173,866.

MPAC valuation of the Other Land

20Ms. Pyott testified and wrote in her report that the principal use of the Other Land is “industrial development” and that this use was the Highest and Best Use. She came to this opinion based on the zoning of the land as “industrial development”.

21She identified five sales of vacant land, zoned Industrial, as purportedly comparable to the Subject Property. All were smaller in size, ranging from 6.71 acres to 41.44 acres. In her view, the most comparable property was at Winger Road, West, a 41.44 acre parcel containing 2.28 acres of conservation land which sold on August 15, 2015 for a time adjusted price of $526,330 or $12,700 per acre. In her view it was most comparable because of its size, which was the closest in size to the Subject Property and because it contained some conservation land. Applying this $12,700 rate to the 86.83 acres of Other Land she derived a value of $1,102,741 for this area of the Subject Property.

22However, Ms. Pyott stated that the Other Land should not be valued solely by comparison vacant land sales with a Highest and Best Use of industrial development because of “the uniqueness and particular circumstances the Subject Property is contingent on.” These included environmental factors, the holding provisions of the zoning By-law and the fact that part of the land was subject to a Hydro transmission tower right of way.

23She reduced the $1,102,741 figure to $975,275 because of these unique and particular circumstances. No explanation was provided how this reduction was arrived at. From this amount she deducted a further $194,000 as the cost to remove the holding provisions of the zoning by-law, to arrive at a value of $781,275 for the Other Land area. She testified that the owner had estimated the cost to cure the holding provision at $194,000, a figure that MPAC accepted.

24Ms. Pyott rounded the sum of values of the three areas to $1,094,000, ($139,807 for the Wetland, $173,866 for the Woodland and $781,275 for the Other Land). In her view, this was the correct current value of the Subject Property at the January 1, 2016 valuation day.

Zoning Evidence

25MPAC also called as a witness Mr. Chris Roome, a planning technician with the City of Port Colborne. Mr. Roome testified that at all material times, the zoning of the Other Land was ID-47-H, an Industrial Development zone subject to the holding provisions of s. 36(1) of the Planning Act, R.S.O. 1990, c. P.13 (“Planning Act”). He explained that pending the lifting of the holding provision, there were no permitted uses on the Subject Property. If, and when, the holding provision was lifted, the permitted use would be Industrial Development. Lifting the holding provision would require the production of satisfactory environmental studies, site plan approval and approval of a septic system.

26Section 4 of By-Law 5989/95/13 of the City of Port Colborne specifies that the required studies include a Phase 2 Archaeological Study, a Geotechnical Study, a Noise Study, an Air Quality Study, a Site Access and Traffic Study, a Vibration Study, a Tree Preservation Plan, an Environmental Impact Statement, and a Risk Assessment Report dependent upon the use proposed. Section 5 of the By-Law also requires a 25-metre setback from all hydro transmission and distribution facilities.

27In cross-examination, Mr. Roome confirmed that the Appellants have never approached the planning department for pre-consultation meetings and have never made an application to change the legally permitted uses of the land or lift the holding provisions of the By-Law for the Subject Property.

Submissions of MPAC

28In addition to submitting that the correct current value of the Subject Property was $1,094,000, MPAC submitted that if the land was not found to be principally zoned for Industrial Development and thus eligible for classification in the Industrial Property class, the classification of the land should default to the Commercial Classification under section 5(1) para 1. of the O. Reg. 282/98.

29In support of their submissions MPAC relies upon Toronto (City) v. Municipal Property Assessment Corp. Region No. 9, [2008] O.A.R.B.D. No. 124, Simcoe Residences Corp. v. Municipal Property Assessment Corp. Region No. 9, [2010] O.A.R.B.D. No. 706 at para. 100 and Toronto (City) v. Municipal Property Assessment Corporation, Region No. 9 [2014] O.A.R.B.D. No. 398.

The Appellant’s Position

30Mr. Gordon Baker, a principal of the corporate appellant, testified as follows. The corporate Appellant purchased the Subject Property from the City of Port Colborne for $1.00 in 2015, in a transaction involving 30 parcels of land totaling approximately 700 acres. He explained that the cost estimate of $194,000, previously provided to MPAC, to remove the holding provision of the zoning by-law, was an estimate that applied to the 700 acres purchased, of which the Subject Property was but one of 30 parcels.

31He testified that his consultants examined all of the parcels purchased and determined that the Subject Property was located in a floodplain and undevelopable. Mr. Baker testified that because of these findings, the Appellant had no intention of conducting any further studies or applying to amend the by-law to lift the holding provisions of the by-law for this Subject Property.

32The Appellants presented no sales or valuation evidence. In a departure from the Appellants’ position that the current value should be $0, Mr. Baker submitted that in light of the prohibition of any permitted uses, and the improbability of an application to permit industrial uses or to lift the holding provisions, the Other Land should be valued at the average value of the Wetland and the Woodland. He did not contest the values attributed by MPAC to the Wetland and the Woodland. The dispute centered on the value of the Other Land.

ANALYSIS

33In the absence of statutory or regulatory dispositions to the contrary, the governing element in establishing value for assessment purposes is the Highest and Best Use of the land. (see Re Tyandaga Golf & Country Club and Town of Burlington, 1970 ONCA 251 at para 1).

34The Appraisal of Real Estate, (3rd Canadian edition), co-authored by The Appraisal Institute (USA) and The Appraisal Institute of Canada, is an authoritative text on the appraisal of real estate in Canada. At p. 12.1, it defines Highest and Best Use as follows:

i. Highest and Best Use may be defined as follows: The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, financially feasible, and that results in the highest value.

35The evidence of Mr. Roome was that there were no legally permitted uses of the Subject Property due to the holding provision, but if the holding provision was lifted, the permitted use would be Industrial Development.

36The Board considered the effect of the holding provisions of s. 36 of the Planning Act in Toronto (City) v. Municipal Property Assessment Corp. Region No. 9, [2008] O.A.R.B.D. No. 124, (“No. 124/2008”), a decision submitted by MPAC. In that decision the Board said as follows (at paras 48-51):

48. The Board does not agree with the complainant that this vacant land zoned RM2 is principally zoned multi-residential for the reasons that the holding designation prevents the land from being used for multi-residential purposes.

49. The Board interprets subsection 36(1) of the Planning Act to mean that a municipal council may zone a property for a particular purpose and then use the holding symbol “H” to defer the zoning from coming into effect. Subsection 36(1) of the Planning Act states that the holding symbol in conjunction with any use designation specifies the use that the land, buildings or structure may be put in the future as the holding symbol is removed.

50. In other words, at some time in the future, the land may be used for multi-residential purposes but it may not presently be used for that purposes because the holding symbol restricts it use.

51. According to the holding provision, the land may be used for the purposes for which it is used before the holding designation was put on. The holding provision does not say that the zoning of the land remains the same as before the holding provision goes on.

37Mr. Baker gave evidence, that because of the floodplain and development constraints on the Other Land, the Appellant was not going to expend further funds for environmental or other studies or apply to have the holding provisions lifted to permit Industrial Development on this parcel.

38The Board finds that industrial development is not legally permitted on the Other Land. Further, there was no reasonable probability, at the date of assessment roll return for the taxation years in question, that the holding provisions of the zoning by-law would be removed.

39Accordingly, MPAC has not established Industrial Development as the Highest and Best Use of the Subject Property. As MPAC’s valuation of the Other Land was based on this Highest and Best Use, its valuation of the Other Land cannot be accepted.

40The Board finds that the Highest and Best Use established by the evidence is similar to that of the Woodland, as the Other Land contains no wetland. Accordingly, the Board finds that the undisputed value of the Woodland shall also apply to the Other Land. Applying the Woodland rate of $2,134.11 per acre to the 86.83 acres of Other Land produces a value of $185,305.

Findings on Issue 1

41The Board finds that the correct current value of the Subject Property is $499,000. This is the rounded sum of the valuation of the Wetland ($139,807), the Woodland ($173,866) and the Other Land ($185,305).

Issue 2 - The Correct Classification of the Portions of the Subject Property

42Once the current value of the Subject Property is determined, s. 14(5) of the Act requires MPAC to apportion the current value to various use classifications set out in the General Regulation 282/98.

Jurisdiction

43The classification of the Subject Property was not cited by the appellants as a ground of appeal under s. 40(1)(a)(iv) of the Act. The Appellants and MPAC did not object to a determination of the classification issue.

44The Board has previously held that once an appeal is filed on any ground, the Board has jurisdiction to correct all aspects of the assessment pursuant to s. 44(1) of the Act. (see CHC Student Housing Oshawa Inc. v Oshawa (City), 2019 CanLII 9703 (ON ARB) at para. 18). This would include correcting any classification errors. Accordingly, the fact that classification was not raised as a ground of appeal does not deprive the Board of the power to deal with the issue on appeal.

The Governing Regulatory Provisions

45Section 5(1) para. 1 of O. Reg. 282/98 classifies as in the Commercial Property Class: “Land and vacant land that is not included in any other property class”.

46Section 6(1) para 2 of O. Reg. 282/98 classifies as in the Industrial Property Class: “Vacant land principally zoned for industrial development”.

47Section 26 para. 4 of O. Reg. 282/98 classifies as “Eligible Conservation Land”, land designated as such by the Minister of Natural Resources for any taxation year. Land classified as Eligible Conservation Land is exempt from taxation under s. 3(1) para. 25 of the Act.

The Wetland

48The classification of the Wetland portion as Eligible Conservation Land (Exempt) for the 2017 and 2018 taxation years was not in issue, as there was the required Ministerial designation per the Regulation.

49For the 2019 and 2020 taxation years, MPAC’s evidence was that no designation by the Minister was made, and accordingly this portion could not be classified as Eligible Conservation Land (Exempt). There being no evidence or submission that it was eligible for classification in any other class, this portion is classified, by default, in the Commercial Class for the 2019 and 2020 taxation year.

50For the deemed appeal for the 2021 taxation year, the Board had no evidence that the Minister’s designation was made. Accordingly, this portion could not be classified as Eligible Conservation Land (Exempt) for the 2021 taxation year. There being no evidence or submission that it was eligible for classification in any other class, this portion is classified, by default, in the Commercial Class for the 2021 taxation year.

The Remaining Land

51The returned classification of the Remaining Land (Woodland and Other Land) was in the Industrial Property class, based on s. 6(1) para. 2 of O. Reg. 281/98 “Vacant land principally zoned for industrial development”.

52The Board’s decision, No. 124/2008, cited above, is to the effect that the land is not “principally zoned” for a use when that zoning is subject to a holding provision.

53MPAC’s other decisions cited do not assist the Board as the properties in those decisions were not subject to the holding provisions pursuant to s. 36 of the Planning Act.

54The Board finds that no part of the Subject Property was eligible to be classified in the Industrial Property class, as no part of the Subject Property was “principally zoned for industrial development”.

55There is no evidence that the Remaining Land (Woodland and Other Land) portion of the Subject Property is in any other property class. Accordingly, its classification must, by default, by classified in the Commercial Property class.

Findings on Issue 2

56The classification of the Wetland for the 2017 and 2018 taxation years as Eligible Conservation Land (Exempt) is confirmed. The classification of the Wetland for the 2019, 2020 and 2021 taxation years is changed from the Industrial Property Class to the Commercial Property class.

57The classification of the Remaining Land (Woodland and Other Land) for the 2017 to 2021 taxation years is changed from the Industrial Property Class to Commercial Property class.

Issue 3 - Whether an equity adjustment in the current value should be made under s. 44(3)(b) of the Act?

58Neither party presented any evidence or submissions on the issue of the requirement of an equity adjustment, accordingly, no adjustment will be made.

CONCLUSION

59The Board finds that the correct current value of the Subject Property is $499,000 at the January 1, 2016 valuation date.

60The Board finds that the correct classification of the Subject Property is the Commercial Property Class, except that for the 2017 and 2018 taxation years, the Wetland portion is Eligible Conservation Land (Exempt).

ORDER

61The Board orders that the correct current value of the Subject Property for taxation in the years 2017 to 2021 is $499,000:

• Appeal # 3242831, 2017 s. 40 appeal: The current value assessment is reduced from $2,031,000 to $499,000, apportioned $139,800 as Eligible Conservation Land (Exempt) and $359,200 to the Commercial Property Class.

• Appeal # 3309295, 2018 s. 40 appeal: The current value assessment is reduced from $2,031,000 to $499,000 apportioned $139,800 as Eligible Conservation Land (Exempt) and $359,200 to the Commercial Property Class.

• Appeal # 3334872, 2018 s. 32 appeal: The current value assessment is reduced from $1,552,000 to $499,000 apportioned $139,800 as Eligible Conservation Land (Exempt) and $359,200 to the Commercial Property Class.

• Appeal # 3362948, 2019 s. 40 appeal: The current value assessment is reduced from $1,552,000 to $499,000 and the classification is changed from the Industrial Property Class to the Commercial Property class.

• Appeal # 3407833, 2020, s. 40 appeal: The current value assessment is reduced from $1,552,000 to $499,000 and the classification is changed from the Industrial Property Class to the Commercial Property class.

• Appeal # 3446640 2021 s. 40 appeal: The current value assessment is reduced from $1,552,000 to $499,000 and the classification is changed from the Industrial Property Class to the Commercial Property class.