Assessment Review Board

ISSUE DATE: August 09, 2022 FILE NO.: WR 180792

Assessed Persons: Pratt Hansen Group Inc., Crisdawn Construction Inc., Pratt Development Inc., Barrie City Appellants: Pratt Hansen Group Inc., Crisdawn Construction Inc., Pratt Development Inc. Respondent: Municipal Property Assessment Corporation Region 16 Respondent: City of Barrie

Property Locations: 3 Greenwich Street, 1 Greenwich Street, Franklin Trail, 109 Franklin Trail, 823 Mapleview Drive East, 770 Lochart Road, and 370 Prince William Way Municipality: City of Barrie Roll Numbers: 4342-040-017-26195-0000, 4342-040-017-26196-0000, 4342-090-018-20879-0000, 4342-090-018-20880-0000, 4342-090-037-08210-0000, 4342-090-037-08211-0000 and 4342-090-037-08214-0000 Appeal Numbers: 3458276, 3489364, 3458277, 3489322, 3437662, 3489352, 3437390, 3489315, 3437392, 3489330, 3437658, 3489355, 3437393, and 3489359 Taxation Years: 2021 and 2022 Hearing Event No.: 772067

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

APPEARANCES:

Parties	Representative
Pratt Hansen Group Inc., Crisdawn Construction Inc., Pratt Development Inc.	Donald Pratt
Municipal Property Assessment Corporation	Charmaine Siddle
City of Barrie	No one appeared

HEARD: August 2, 2022 by telephone conference call

ADJUDICATOR: Jean-Paul Pilon, Member

DECISION

OVERVIEW

1Donald Pratt (the “Appellant”) is a principal of companies that either own or previously owned seven properties in the City of Barrie (the “Subject Properties”) for which he appealed assessments for the 2021 taxation year. Further appeals for the Subject Properties were deemed for the 2022 taxation year pursuant to section 40(26) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”).

Background

2The Subject Properties were assessed by the Municipal Property Assessment Corporation (“MPAC”) as open-space, storm water management ponds or landlocked buffer land. Applicable zoning by-laws prohibited building on any of the Subject Properties, and each of them was encumbered by subdivision agreements registered on title. Among other things, these subdivision agreements compelled Mr. Pratt’s companies to convey the Subject Properties to the City of Barrie (the “Municipality”).

3MPAC’s position at the hearing was that all but one of the assessments of the Subject Properties should be reduced substantially from those returned based on its analysis using the direct comparison approach to determining value. The Appellant argued that the assessments of the Subject Properties should instead be reduced to zero because of the restrictions attached to them.

4Some but not all of the properties comprising the Subject Properties have already been conveyed to the Municipality. For simplicity they are all referred to in this decision in the past tense.

Issue for the Hearing

5The single issue at the hearing was the current value of the Subject Properties. The Appellant did not raise equity as an issue in his Statements of Issues, however MPAC addressed equity of assessments in general terms in its evidence at the hearing.

Results

6The assessments of the Subject Properties are to be adjusted as follows for the 2021 and 2022 taxation years, with no change to their classification in the residential property class:

a. Franklin Trail (4342-090-018-20879): $57,000;

b. 109 Franklin Trail (4342-090-018-20880): $9,000;

c. 3 Greenwich Street (4342-040-017-26195): $2,300;

d. 1 Greenwich Street (4342-040-017-26196): $166,000;

e. 823 Mapleview Road East (4342-090-037-08210): $55,000;

f. 770 Lochart Road (4342-090-037-08211): $104,000;

g. 370 Prince William Way (4342-090-037-0814): $3,300.

Evidence

The Subject Properties

7The Subject Properties were located in three separate neighbourhoods as follows:

a. Bear Creek Ridge, which included two properties:

i. Franklin Trail, which was open-space of 14.81 acres and which had returned assessments of $317,000 for the 2021 and 2022 taxation years; and

ii. 109 Franklin Trail, which was a storm water management pond of 4.82 acres returned at $47,000 for the 2021 and 2022 taxation years;

b. Greenwich Village, which included two properties:

i. 3 Greenwich Street, which was a storm water management pond of 1.23 acres returned at $116,000 for the 2021 taxation year and $29,000 for the 2022 taxation year; and

ii. 1 Greenwich Street, open-space of 57.5 acres returned at $642,000 for the 2021 taxation year and $64,000 for the 2022 taxation year;

c. Hewitt’s Gate/Bistro 6, which included three properties:

i. 823 Mapleview Drive East, open-space of 14.29 acres returned at $322,000 for the 2021 taxation year and $96,000 for the 2022 taxation year;

ii. 770 Lochart Road, open-space of 27.12 acres returned at $433,000 for the 2021 taxation year and $130,000 for the 2022 taxation year; and

iii. 370 Prince William Way, which was landlocked buffer land of 1.75 acres returned at $32,500 for the 2021 and 2022 taxation years.

MPAC’s Evidence

8All of the properties comprising the Subject Properties fell into three broad descriptions: open-space, storm water management ponds, and a single property of landlocked buffer land. In its analysis using the direct comparison approach, MPAC used the same three comparable properties that had sold for each the three types of property in these appeals as described below:

a. for the open-space properties, 201 Miller and 6135 Penetanguishene Road; and

b. for the storm water management ponds and buffer lands, Elliott Sideroad.

Bear Creek Ridge

9In its Valuation Report, MPAC described this development as including single-family residences, townhouses and mid-rise condominiums. It also said that construction began in 2018 and continues, and that occupation started in 2020. The two properties at Bear Creek Ridge included a property known as Franklin Trail, open-space of 14.81 acres, and 109 Franklin Trail, a 4.82 acre storm water management pond.

10In arriving at its position of current value for the first of these two properties, Franklin Trail, MPAC relied on the sales prices of two properties: 201 Miller and 6135 Penetanguishene Road. It argued that these two were comparable because they were both similar open-space properties that were unbuildable and were purchased by the Municipality.

11201 Miller Drive had a site area of 10 acres and sold to the Municipality on April 24, 2015 for $60,000 at a rate per acre of $6,000.

126135 Penetanguishene Road had a site area of 76.96 acres. It sold to Simcoe County on August 22, 2014 for $132,0000 at a rate per acre of $1,715.18.

13MPAC derived a mean price per acre from these properties of $3,857 per acre to determine a current value of $57,000 rounded for Franklin Trail.

14For the second of these properties at Bear Creek Ridge, 109 Franklin Trail, MPAC argued that the assessment should be reduced to $9,000 rounded. This was based on the sale of a single comparable storm water management pond of 1.56 acres at Elliott Sideroad, which property was sold to Tay Township on January 19, 2017 for $3,000 at a rate per acre of $1,923.

Greenwich Village

15Greenwich Village was described by MPAC as a development that included mid-rise condominiums and single-family dwellings where occupation began in 2017. It included two properties: 3 Greenwich Street, a storm water management pond, and 1 Greenwich Street which was open-space. Both of these were acquired by the Municipality on October 14, 2021.

16To determine the current value of 3 Greenwich Street, MPAC used the same comparable property it used for 109 Franklin Trail, Elliott Sideroad, with a rate per acre of $1,923. Applied to the acreage of 1 Greenwich Street of 1.23 acres, MPAC took the position that the current value of this property was $2,300 rounded.

17To determine the current value of 1 Greenwich Street, MPAC relied on the same comparable properties as it did for the Franklin Trail property above, 201 Miller Drive and 6135 Penetanguishene Road at a mean rate per acre of $3,875. It then multiplied this rate by 0.75 to account for economies of scale, an adjustment that was unexplained but also uncontested at the hearing. This resulted in a rate per acre of $2,892. When applied to 1 Greenwich Street which had 57.5 acres, the result was MPAC’s opinion of value of $166,000 rounded.

Hewitt’s Gate/Bistro 6

18The Hewitt’s Gate and Bistro 6 developments were described in MPAC’s report and “ongoing and at different stages” with “construction of single-family dwellings (having) begun at Hewitt’s Gate while low rise condominiums at Bistro 6 have commenced being occupied (sic) in mid-2021.”

19Between these two developments were 823 Mapleview Drive East and 770 Lochart Road, both open-space properties. As with the other open-space properties above, MPAC used sales at 201 Miller Drive and 6135 Penetanguishene Road to reach a value per acre of $3,857. Applied to the acreage of 823 Mapleview Drive East of 14.29, MPAC’s opinion of value was $55,000 rounded. Applied to the acreage of 770 Lochart Road of 27.12, MPAC’s opinion of value was $104,000 rounded.

20Finally, 370 Prince William Way was landlocked buffer land of 1.75 acres. To arrive at its opinion of current value for this property, MPAC used the same comparable property as it did for storm water management ponds, Elliott Sideroad, at a rate of $1,923 per acre. Applied to this 1.56 acre property, MPAC’s opinion of value was $3,300 rounded.

21As noted earlier, MPAC’s expert report commented on equity even though the Appellant did not raise it in his Statements of Issues as he would have been required to do. This was a list of 14 other properties, also unbuildable open-space and storm water ponds similarly owned by developers or municipalities. This submission was, in essence, a reply to the Appellant’s position that the Subject Properties should have no value because all of these properties had assessed values above zero. In MPAC’s submission it would have been inequitable for the Subject Properties to have zero assessments while these other properties had assessments more than that.

Summary

22In summary, MPAC’s position at the hearing was that:

a. the assessment of Franklin Trail should be reduced to $57,000 for the 2021 and 2022 taxation years;

b. the assessment of 109 Franklin Trail should be reduced to $9,000 for the 2021 and 2022 taxation years;

c. the assessment of 3 Greenwich Street should be reduced to $2,300 for the 2021 and 2022 taxation years;

d. the assessment of 1 Greenwich Street should be adjusted from $642,000 to $166,000 for the 2021 and 2022 taxation years (see footnote later in this decision);

e. the assessment of 823 Mapleview Drive should be reduced to $55,000 for the 2021 and 2022 taxation years;

f. the assessment of 770 Lochart Road should be reduced to $104,000 for both 2021 and 2022 taxation years; and

g. the assessment of 370 Prince William Way should be reduced to $3,300 for the 2021 and 2022 taxation years.

Appellant’s Evidence

23The Appellant’s evidence submitted prior to the hearing included excerpts of applicable zoning by-laws, subdivision agreements, subdivision plans, environmental permits, drawings, photographs and tax bills. Several of his Statements of Response made reference to other properties at municipal addresses that had sold to other municipalities, but no further details of these properties or transactions were provided.

24MPAC did not take issue with the Appellant’s evidence that the applicable subdivision agreements required the transfer of all of the Subject Properties to the Municipality at no charge. Nor was it contested that the Appellant was required to insure the Subject Properties, that they were unbuildable or that some of them had not yet been conveyed to the Municipality. The Appellant also testified that none of the properties relied upon by MPAC were properties on a registered plan of subdivision, but on cross-examination he was less certain. Otherwise, his position was that none of those properties were comparable to the Subject Properties.

ANALYSIS

25 Section 19(1) of the Act provides that “the assessment of land shall be based on its current value.” “Current value” is defined in section 1(1) of the Act 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 (emphasis added).”

26The subdivision agreements registered against title to the Subject Properties required that the Appellant’s companies convey them to the Municipality at no charge. The Appellant’s primary argument was that the Subject Properties had no value because they could not be sold on the open market and had to be sold to the Municipality.

27Both parties agreed that the subdivision agreements were encumbrances on Subject Properties. The Act requires the Assessment Review Board (the “Board”) to determine the current value of the Subject Properties as if they were unencumbered, therefore the Board proceeded with its valuation analysis as if the subdivision agreements did not apply. Specifically, the obligation for the Appellant’s companies to convey the Subject Properties to the Municipality at no charge was in those agreements, therefore the Board had to determine current value without consideration of the impact that those obligations might have had on the current value of the Subject Properties.

28This conclusion was consistent with the Board’s decision in Elgin and St. Thomas Housing Corp. v. Municipal Property Assessment Corp. Region No. 23, [2008] O.A.R.B.D. No. 222 at paras. 21 and 22, where the Board found that constraints imposed by the former Social Housing Reform Act were an encumbrance on a property. That meant that current value “should be calculated on the basis of the typical market rents (the owner) would achieve if not subject to these constraints, and not on the basis of the much lower actual rents it achieves because of these restraints.” Continuing, the Board wrote that “if this were not so, it would result in the absurd situation of two identical buildings on identical lots, next to each other, being assessed at significantly different current values, because one is subject to the constrains of the Social Housing Reform Act and the other is not.”

29The Subject Properties were not identical, nor were they next to each other. However, the Act effectively directs the Board to determine current value without regard to encumbrances which would include these subdivision agreements and their requirements. As the Board was required to disregard those obligations in its determination of current value because they were encumbrances, the Board found that MPAC’s comparable properties were, in fact, comparable because they were similar to the Subject Properties. They were also conveyed for value from a willing seller to a willing buyer.

30Aside from the encumbrance issue, the Board agreed with MPAC’s submission that the Subject Properties should not have zero value because their existence, particularly in the case of open-space properties, provided tangible value to the surrounding developments which were marketed accordingly. Moreover, although unrelated to the Board’s specific obligation to adjust for equity pursuant to section 44(3)(b) of the Act which was not pleaded, the Board agreed that it would not be equitable for the Subject Properties to have no value while the similar properties in MPAC’s argument had assessed value.

31It was the case that some of MPAC’s comparable properties transacted outside of the shoulder years surrounding the valuation date of January 1, 2016. In addition, in a single instance MPAC adjusted the sale price of one of those properties for economies of scale (to the Appellant’s benefit) without any evidence to support it. However, the direct comparison approach required evidence relating to the sale of comparable properties to determine the current value of the Subject Properties, and MPAC’s evidence was the best and only evidence before the Board of the value using the direct comparison approach.

32The Board therefore concurred that the assessments of the Subject Properties should be reduced¹ based on the evidence presented at the hearing.

CONCLUSION

33The assessments of the Subject Properties should be adjusted as ordered below.

ORDER

34The Board orders that the adjustment of the assessments for the following properties are to be adjusted as follows, with all remaining in the Residential Property Class: