Tribunals Ontario

Assessment Review Board

ISSUE DATE: March 09, 2023 FILE NO.: WR 183248

Assessed Person(s): Donald Alexander McArthur; Birgit Knoll-McArthur Appellant(s): Donald Alexander McArthur; Birgit Knoll-McArthur Respondent(s): South River Village Respondent(s): Municipal Property Assessment Corporation Region 28

Property Location(s): 28 Ottawa Avenue Municipality(ies): South River Village Roll Number(s): 4956-000-001-18810-0000 Appeal Number(s): 3499469 Taxation Year(s): 2022 Hearing Event No.: 778866

Legislative Authority: Section 34 of the Assessment Act, R.S.O. 1990, c. A.31

APPEARANCES:

Parties	Representative
Donald McArthur	Self-represented
Municipal Property Assessment Corporation	Tyler McClenaghan
South River Village	No one appeared

HEARD: January 24, 2023 and February 2, 2023 by telephone conference call

ADJUDICATOR(S): Carly Stringer, Member

DECISION

OVERVIEW

1Donald Alexander McArthur (the “Appellant”) brought an appeal before the Assessment Review Board (the “Board”) relating to a supplementary assessment issued pursuant to s. 34 of the Assessment Act, R.S.O. 1990, c. A.31 (the “Act”) for 28 Ottawa Avenue (the “Subject Property”) in South River Village for the 2022 taxation year.

2The Subject Property was initially assessed at $88,000 as vacant land for the 2022 taxation year. The Municipal Property Assessment Corporation (“MPAC”) subsequently inspected the Subject Property after a residence was built. MPAC issued the supplementary assessment of $444,000 effective February 15, 2022 based on 96% completion of the residence, bringing the total assessed value to $532,000 for the 2022 taxation year.

3The assessment of $88,000 is not under appeal. It is the Appellant’s position that the supplementary assessment is too high and the Board should reduce it.

4MPAC takes the position that the total assessed value should be $545,000.

Areas of Agreement

5The parties agree that the direct comparison approach is the appropriate valuation methodology.

Issues for the Hearing

6At issue in this proceeding is:

1. What is the current value of the Subject Property as of the statutory valuation date of January 1, 2016? and
2. Is the current value equitable with the assessments of similar lands in the vicinity?

Result

7For the reasons that follow, the Board finds the current value that applies to the supplementary assessment on appeal is $438,720.

8The Board also finds that a reduction is required to make the assessment of the Subject Property equitable with the assessments of similar lands in the vicinity, resulting in a supplementary assessment value of $252,480.

ANALYSIS

Description of Subject Property

9The Subject Property is located on Ottawa Avenue, one of the main arteries that runs through South River Village. The Subject Property is a 0.33-acre lot, improved with a single-family detached residence. The residence was built in 2022. It is a 1.5 storey home with an unfinished basement walkout, 3 bedrooms, 2 baths, and an attached garage. The total area of the residence is 1,724 square feet (“sq. ft.”). The Subject Property is located on the water, with 110 feet of effective frontage.

Issue 1 – What is the current value of the Subject Property as of the statutory valuation date of January 1, 2016?

Applicable Law

10In accordance with s. 44(3)(a) of the Act, the Board must first determine “the current value of the land”. Section 1 of the Act defines current value 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”.

11Accordingly, the Board must first determine what the Subject Property would have sold for in an arm’s length transaction on the statutory valuation day. Section 19.2(1) of the Act confirms that the valuation day for the 2022 taxation year is January 1, 2016.

Evidence on Current Value

12The best evidence of current value would be the sale of the Subject Property on or close to the valuation day of January 1, 2016. If no such sale occurred, the Board will consider sales of comparable properties to establish the current value of the Subject Property.

13MPAC stated there were insufficient sales in South River and provided the Board with evidence regarding sales of seven (7) proposed comparable properties within 20 km of the Subject Property. MPAC relied on the sale prices of only three (3) properties that it said were the most similar to the Subject Property. MPAC performed a time adjustment to reflect what these properties would have sold for on January 1, 2016.

MPAC’s Proposed Comparable Properties and Sales Information

Property Address	Subject Property	41 Machar Crescent	60 Pipes Pan Lane	678 South Lake Bernard Road
Sale Date		July 2015	June 2017	February 2017
Time Adjusted Sale Amount		$557,944	$567,239	$502,529
Building Area (sq. ft.)	1,724	1,801	1,748	1,901
Effective Site Area (acres)	0.33	0.42	0.52	1.01
Effective Year Built	2022	2001	2004	2010
Storeys	1 ½	1	2	2
Effective Frontage	110	100	54	128.77
Distance from the Subject Property in km		10.9669	15.3685	16.015
Quality of Construction	7	6.5	6.5	7
Bedrooms	3	4	3	2
Bathrooms	2	2	2.5	2

14Based on the sale prices of these properties, MPAC testified that the current value of the Subject Property is $545,000.

15The Appellant contested MPAC’s properties on the basis that they are not located in the same municipality as the Subject Property. The Appellant testified that:

a. He spent a lot of time trying to either purchase or build a home in the area and therefore became very familiar with property values.

b. South River is a unique area of four-square kilometers that has its own unique property value influences, with much lower property values than other municipalities nearby. The Appellant referenced factors such as high tax rates; a contaminated chemical plant; no power boating on the river; and Ottawa Avenue being a truck route.

c. In light of the lower property values, only homes in South River should be used in the analysis.

d. The five nearest homes on Ottawa Avenue on waterfront are the best comparators for market value.

Appellant’s Proposed Comparable Properties Information

Property Address	Subject Property	30 Ottawa Avenue	26 Ottawa Avenue	32 Ottawa Avenue	38 Ottawa Avenue	14 Ottawa Avenue
Sale Date		2017 and November 2021	November 2021	No valid sales	No valid sales	No valid sales
Sale Amount		2017: $225,000 November 2021: $780,000	$675,000
Assessment Value	$532,000 ($88,000 returned assessment and $444,000 supplementary)	$356,000	$346,000	$154,000	$279,000	$567,000
Building Area (sq. ft.)	1,724	1,736	1,295	1,000	1,660
Effective Site Area (acres)	0.33	0.1899	1.2355	0.18	0.34	1.59
Year Built	2022	2014	2002	1910	2007	2002
Quality of Construction	7	6	6	6	6	6.5
Storeys	1.5	1.25	1	2	2	1
Frontage	110	67.88	198.74	66	140.13	400
Bedrooms	3	5
Bathrooms	2	3	2

16The Appellant stated that the two best comparators are 26 and 30 Ottawa Avenue, which are immediate neighbours to the Subject Property. 26 Ottawa Avenue is a solid brick bungalow that would have been 14 years old as of January 1, 2016. It has twice the frontage of the Subject Property. 30 Ottawa Avenue is a closer comparison as it is on a slightly smaller lot, slightly larger home with two more bedrooms, one more bathroom, a finished basement, landscaped with a dock, and premium post and beam construction. It was built in 2014 so it was virtually brand new in 2016. The Appellant testified that 30 Ottawa Avenue sold in 2017 for $225,000 and again in November 2021 for $780,000.

17The Appellant stated that a current value of between $320,000 and $340,000 would be “realistic”.

18MPAC challenged the Appellant’s use of 30 Ottawa Avenue for two reasons. First, it was a quality construction of 6 and therefore not sufficiently comparable. Second, in MPAC’s view, there was insufficient evidence that the 2017 sale of 30 Ottawa Avenue was a valid arm’s length transaction. MPAC stated that the property sold for $225,000 in 2017; for $360,000 in 2019; and for $780,000 in 2021. MPAC stated that the jump in sale price caused the assessor to question the validity of the sales, and that the assessor was not able to determine whether the sale in 2017 was a valid arm’s length sale. Accordingly, MPAC stated, 30 Ottawa Avenue should not be relied upon as a comparable property sale.

Findings on Issue 1

19The Board has analyzed the proposed comparable sales submitted by the parties and makes the following findings:

a. The Board does not accept the Appellant’s submission that MPAC’s proposed comparable properties should not be relied upon because they are not located in South River. The Board finds there is insufficient evidence to substantiate the Appellant’s theory that South River has “unique property value influences”. The Board accepts MPAC’s evidence that there was an insufficient number of property sales in South River at or within a year of January 1, 2016, and finds that using sales within 20 km of the Subject Property is reasonable in the circumstances.

b. The Board finds that 41 Machar Crescent, 60 Pipes Pan Lane, and 678 South Lake Bernard Road are sufficiently comparable to the Subject Property to assist in the determination of current value because:

i. They all sold within 18 months of the statutory valuation date, and the sale prices were suitably time-adjusted. Although the Board prefers sales that occur within 12 months of the statutory valuation date, the Board has – and does in this instance – accept sales from as far as 18 months from the valuation date: see Allen v Municipal Property Assessment Corporation Region 15, 2021 CanLII 44157 (ON ARB) at paragraph 26.

ii. These properties are one to two storeys which is sufficiently comparable to one-and-one-half storeys at the Subject Property.

iii. They have two or two-and-one-half bathrooms which is sufficiently comparable to the Subject Property’s two bathrooms.

iv. The quality of construction is 6.5 or 7 which is sufficiently comparable to 7 for the Subject Property.

v. The buildings are close in size.

c. The Board does not rely on the Appellant’s sale evidence because

i. The 26 Ottawa Avenue and 30 Ottawa Avenue sales from 2021 are too far removed from the valuation date for the Board to be confident that the sale prices are reflective of market value on January 1, 2016

ii. With respect to the sale of 30 Ottawa Avenue in 2017 for $225,000, MPAC testified that it was unable to confirm that this was a valid, arms-length transaction. The Appellant did not provide the Board with evidence confirming that this was a valid, arm’s length, open-market transaction, nor did the Appellant perform a time-adjustment to the sale price to reflect what it would have been on the statutory valuation date.

iii. The remaining properties on Ottawa Avenue were not sold, and accordingly there is no sale price for these properties on which the Board may rely to determine current value.

20Based on the sale prices of 41 Machar Crescent, 60 Pipes Pan Lane, and 678 South Lake Bernard Road, the Board finds that a current value of $545,000 is reasonably correct for a property with a fully completed residence.

21However, the Board does not accept MPAC’s submission that $545,000 is the correct current value that applies in this case. The assessment under appeal is a supplementary assessment effective February 15, 2022 in the amount of $444,000 based on 96% completion of the residence at the Subject Property. MPAC did not issue a second supplementary assessment based on 100% completion. It would be unfair for the Board to find a current value based on 100% completion when, at the effective date of the supplementary assessment, the residence was only 96% complete.

22Therefore, the Board makes its finding of current value as follows:

a. The Board finds that a reasonably correct current value is $545,000 for a fully completed residence.

b. The returned assessment of $88,000 is not under appeal.

c. $545,000 less $88,000 equals $457,000. Therefore, the remaining current value would be $457,000 if the Board were valuing based on 100% completion of the residence on the Subject Property.

d. The Board is valuing based on 96% completion of the residence at the effective date of the supplementary assessment under appeal, therefore $457,000 x 0.96 is $438,720.

23The Board finds the applicable current value for the supplementary assessment under appeal is $438,720.

Issue 2 - Is the current value equitable with the assessments of similar lands in the vicinity?

Applicable Law

24Section 44(3)(b) of the Act directs that, after determining current value, the Board shall have reference to the value at which similar lands in the vicinity are assessed and “adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land”.

Evidence on Equitable Adjustment

25The Appellant provided evidence of the assessments of his immediate neighbours on Ottawa Avenue, which are almost all significantly lower than $545,000: see the chart at paragraph 15 above. The Appellant stated that the most similar property to the Subject Property is 30 Ottawa Avenue, for which the 2016 current value assessment is $356,000. The Appellant stated that this amount is “slightly higher” than what his assessment should be. The Appellant stated that 26 Ottawa Avenue is also very similar, although it has more frontage and has the ability to sever out a separate building lot which would add value. The 2016 CVA for 26 Ottawa Avenue is $346,000.

26Referencing these assessments of properties on Ottawa Avenue that the Appellant said are “slightly superior” to the Subject Property, the Appellant stated that an overall assessment value of “somewhere between $320,000 and $340,000 would be realistic.”

27MPAC provided an equity analysis report detailing the sales of 33 properties located within 11 kilometres of the Subject Property, occurring between January 1, 2015 and January 1, 2018. MPAC calculated an Assessment to Sale Ratio (“ASR”) for each property. The ASR of a sample of sold properties is a tool often used to determine if a property in the vicinity is assessed below its current value. If sold properties are assessed below their current value, a reduction in the subject assessment below current value is required to make the subject assessment equitable with the assessments of similar lands in the vicinity. The ASR is determined by comparing the assessment as returned to the time-adjusted sale price, expressed as a mathematical ratio.

28MPAC’s analysis reflected a median ASR of 1.04. MPAC stated that this 1.04 median ASR reflects that equity is achieved and an equitable adjustment is not required.

Findings on Issue 2

29The Board does not accept MPAC’s equity analysis evidence. Some of the sales relied upon by MPAC in its analysis occurred more than 18 months past the statutory valuation date of January 1, 2016. These are too far removed for the Board to be confident they are reliable indicators of value at the relevant time. Moreover, MPAC included 30 Ottawa Avenue’s 2017 sale in its equity analysis, despite providing evidence that it could not be sure that it was a valid, arm’s length transaction.

30The Board notes that sales are not always necessary to determine whether an equitable adjustment is necessary, unlike in the direct comparison approach used to determine current value: see Runfree Aldershot Inc. v Municipal Property Assessment Corporation, Region 15, 2022 CanLII 93082 (ON ARB) at paragraph 29. However, as confirmed by the Board in its review decision Menard v Municipal Property Assessment Corporation, Region 28, 2021 CanLII 59499 at paragraph 29, the absence of sales data “makes any conclusion significantly less reliable unless such properties are very similar to the property at issue in an appeal, so that their assessments can be compared to one another.”

31The Board finds that the best evidence on whether an equitable adjustment is necessary comes from the Appellant. The Board finds that 30 Ottawa Avenue and 26 Ottawa Avenue are sufficiently similar to the Subject Property for the purpose of comparing their assessments because they are sufficiently similar in terms of storeys, bathrooms, quality of construction, building area, and being single detached family homes on water in very close vicinity.

3230 Ottawa Avenue has a 2016 CVA of $356,000 and 26 Ottawa Avenue has a 2016 CVA of $346,000. The Board finds that both properties are very similar to the Subject Property, and not superior as stated by the Appellant. For instance, though 26 Ottawa Avenue has more frontage and a larger lot, the Subject Property has a brand-new residence. Accordingly, the Board finds that the midpoint between $356,000 and $346,000, or $351,000, is a reasonable assessment in the circumstances for a 100% completed residence.

33The Board finds that an equitable reduction of the current value is required to achieve equitable assessment. The total assessed value for a fully completed residence, with a reduction in accordance with s. 44(3)(b) of the Act, is $351,000. As noted above, the initial returned assessment of $88,000 is not under appeal. Reducing the $351,000 by the $88,000 returned assessment that is not under appeal results in an equitable value for the supplementary assessment of $263,000 at 100% completion.

34At the February 15, 2022 effective date of the supplementary assessment, the residence at the Subject Property was only 96% complete. Therefore, the Board finds that 96% of $263,000 is $252,480, which is the value of the supplementary assessment with an equitable adjustment.

CONCLUSION

35The Board finds the current value that applies to the supplementary assessment on appeal is $438,720.

36The Board has had reference to the assessments of similar lands in the vicinity and finds that a reduction is required to make the assessment of the Subject Property equitable, resulting in a supplementary assessment value of $252,480.

ORDER

37The Board orders that the supplementary assessment of $444,000 is reduced to $252,480.

"Carly Stringer"

CARLY STRINGER MEMBER Assessment Review Board

Website: www.tribunalsontario.ca/arb