Tribunals Ontario

Assessment Review Board

Issue Date: April 04, 2024 File No.: WR 185943 Assessed Person(s): Joseph Larry Montgomery; Veronica Lynn Montgomery Appellant(s): Joe Montgomery; Veronica Montgomery Respondent(s): Municipal Property Assessment Corporation Region 05 Respondent(s): City of Kingston Property Location(s): 1406 John F. Scott Road Municipality(ies): City of Kingston Roll Number(s): 1011-090-040-01750-0000 Appeal Number(s): 3518069 and 3524747 Taxation Year(s): 2023 and 2024 Hearing Event No.: 783284 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31

Appearances:

Parties	Representative
Joe and Veronica Montgomery	Self-represented
Municipal Property Assessment Corporation	Amber Walsh
City of Kingston	No one appeared

Heard: March 12, 2024 by telephone conference call Adjudicator(s): Dan Weagant, Member

DECISION

OVERVIEW

1Joe and Veronica Montgomery (the "Appellants") believe the assessment of their family home at 1406 John F. Scott Road ("subject property") is too high. For the 2023 taxation year, the Municipal Property Assessment Corporation ("MPAC") returned an assessment of $866,000 in the Residential property class. The Appellants believe the correct assessment value should be in the high $600,000 range.

2The Appellants' filed an appeal of the returned value under s. 40 of the Assessment Act, R.S.O. 1990, c. A.31 (the "Act"). Pursuant to s. 40(26) of the Act, the Appellants are deemed to have brought the same appeal in respect of the 2024 taxation year.

3MPAC's returned current value assessment was a result of a downward adjustment applied by MPAC to an earlier value to reflect the impact of an easement that transects the subject property. In preparation for this hearing, MPAC developed an opinion of current value of $1,112,000. At the outset of the hearing, MPAC made it clear that it was not seeking an increase in the assessment returned. MPAC recommended that the Board confirm the assessment as returned.

BACKGROUND

4The Appellants believe the assessment returned is unfair in its application because the subject property is a single-storey dwelling with no basement. They submit that, because the subject property is a slab on grade dwelling, its assessment per square foot of living area is disproportionate to that of properties where significant portions of living area are below grade in a lower level or basement.

Areas of Agreement

5The parties agree that the subject property is in the Residential property class.

Issues for the Hearing

6At issue in this proceeding is:

1. A determination of the current value of the subject property; and
2. Whether an equity reduction in the current value should be made when reference is made to the assessments of similar lands in the vicinity.

Result

7The Assessment Review Board ("Board") finds that the correct current value of the subject property is $883,000. The Board further finds that when the reference is made to the assessments of similar lands in the vicinity, there is no requirement to reduce the current value determined to achieve equitable assessment.

8As the correct current value determined is not a substantive change to the value returned, the Board confirms the assessment returned for the 2023 and 2024 taxation years of $866,000, in the Residential property class.

ANALYSIS

Description of Subject Property

9The subject property is a 3-acre site located between John F. Scott Road and Highway 401 in the rural area of the City of Kingston. The land is improved by a 4,734 square foot single family dwelling with an attached garage of 2,300 square feet. The existing dwelling is a slab-on-grade structure of one storey, with no basement. The Appellants purchased the land in 2013 and completed construction of the dwelling in 2020. The Appellants acted as their own general contractor in the completion of the dwelling and site improvements.

10The subject property includes an easement in favour of Hydro One that crosses the land between the subject dwelling and John F. Scott Road.

Issue 1 – What is the correct current value of the subject property?

MPAC's Evidence and Submissions

11MPAC derived its current value assessment based on a comparison of the subject property with two sets of sales data. The first set was a comparison of the subject property to three single family dwellings that sold between June 2014 and January 2017. Two of these sales selected by MPAC were within six kilometres of the subject property and the third was just under 11 kilometres away.

12The second set of comparable properties selected by MPAC, and ultimately the source of its opinion of current value, comprised four sales that took place between July 2015 and June 2017. These four sales comparisons were for single family, slab-on-grade structures with no basement. They were located from 13 to 19 kilometres away from the subject property. MPAC selected these sales chiefly for their shared characteristics with the subject property of being slab on grade dwellings.

MPAC's Data Set No. 1

13The first comparable sale cited by MPAC is 1441 English Way, a single detached dwelling on 2.21 acres of land. It was constructed in 2003 and as a single storey structure. It has a total building area of 2,690 square feet with a finished basement area of 2,286 square feet. It has an outdoor pool and an attached garage of 698 square feet. This property sold in January of 2016 for $753,000.

14The second comparable sale is 618 River Ridge Drive, a single detached dwelling on two acres of land. It was constructed in 1985 and is a single storey. It has a total building area of 2,641 square feet with a finished basement of 1,000 square feet. It has an attached garage of 628 square feet. This property sold in January of 2017 for $740,000.

15The third property in MPAC's Data Set No. 1 is 175 Deer Creek Drive, a single detached dwelling on 1.9 acres of land. It was constructed in 2011 and is a single storey. It has a total building area of 2,881 square feet with a finished basement of 2,448 square feet. It has an attached garage of 619 square feet and a detached garage of 561 square feet. This property sold in June of 2014 for $1,160,000.

MPAC's Data Set No. 2

16All four properties in MPAC's Data Set No. 2 are single detached, slab on grade dwellings. The first of these is 3901 Greenfield Road, located on 2.42 acres of land. It was constructed in 2010 with a total living area of 2,111 square feet. It has an attached garage of 619 square feet. This property sold in July 2015 for $445,000.

17The second property in MPAC's Data Set No. 2 is 3044 Forest Road, located on 3.04 acres of land. It was constructed in 2012 with a total living area of 1,974 square feet. It has an attached garage of 615 square feet and a detached garage of 908 square feet. This property sold for $480,000 in June of 2017.

18The third property in MPAC's Data Set No. 2 is 1271 Crossfield Avenue, located on 0.09 acres of land. It was constructed in 2013 with a total living area of 1,645 square feet. It has an attached garage of 436 square feet. This property sold in March of 2017 for $425,500.

19The last property in MPAC's Data Set No. 2 is 497 Sydney Street, located on 0.18 acres of land. It was constructed in 2011 with a total living area of 1,754 square feet. It has an attached garage of 455 square feet. This property sold for $445,900 in June of 2017.

20MPAC views the subject property as being unique in the market area owing to its size and its construction as a slab on grade dwelling. MPAC indicated that living area below grade is assessed by MPAC at a lower rate per square foot than living area on the main or upper floors. MPAC submitted that main floor square footage is assessed at the highest level. In this region of the province, MPAC applies a value of $28 per square foot to finished basement areas.

21MPAC's approach with its first data set was to frame the likely current value of the subject property by using a range of sale values of comparable properties. Its conclusion was that the current value of the subject property is likely above $751,000; the highest time adjusted sale value of the three sales in Data Set No. 1 that was clearly inferior to the subject property owing to its age, and size as compared to the subject property. The higher end of the range as determined by MPAC was the time adjusted sale value of 175 Deer Creek Drive, at $1,160,033. MPAC considered this property to be comparable to the subject property.

22Having established a range of value within which the subject property might lie, MPAC conducted its second analysis and compared the subject property to four residential, slab on grade dwellings that sold in 2015 and 2017. The time adjusted sale value range per square foot of these four properties is $214 to $242, with a median of approximately $235.

23To determine the current value of the subject property, MPAC applied this per square foot value to the 4,734 square feet of living area at the subject property to arrive at its opinion of current value of $1,112,000, noting that this value is very similar to the time adjusted sale value of 175 Deer Park Drive; the property MPAC considers to be the most comparable property in evidence.

Appellants' Evidence and Submissions

24The Appellants submitted that the comparable properties cited by MPAC were inappropriate in determining the current value of the subject property for several reasons:

• They are not of suitable similar size and / or character;
• the comparable properties in MPAC's Data Set No. 1 are single storey dwellings with full basements; and
• MPAC did not suitably account for the value differences between slab on grade dwellings and dwellings with living areas in finished basements.

25The Appellants argued that slab on grade dwellings are penalized in current value assessment where per square foot values are applied, because all of the living area is on the main floor. They argue that where living area is spread between the main floor and a finished basement, MPAC inordinately applies a significantly lower value per square foot for the basement level versus the value placed on the main level. It is the Appellants' contention that all living area should be assessed the same, whether such living area is on the main floor of a dwelling or is part of a finished basement level.

26In arriving at their opinion of current value, the Appellants relied on comparisons between the subject property and the assessments of two properties they deemed to be similar in character to the subject property. Neither of the two properties selected by the Appellants was sold in proximity to the valuation day of January 1, 2016. The Appellants compared the assessments of these two other properties to the assessment of the subject property. Ultimately the approach taken by the Appellants is an argument of equitable assessment, as assessments of other properties do not indicate a current value of a subject property. Rather is a conceptual value based on property sale comparisons.

27The Appellants' case is addressed in the section below, related to equitable assessment.

Findings on Issue 1

28The 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". Further, as prescribed in s. 19.2 of the Act, current value is established on the valuation day stipulated for the year under appeal. This appeal was filed or the 2023 taxation year. The statutory valuation day prescribed for 2023 and 2024 is January 1, 2016.

29The Act does not prescribe a method or approach to be taken in determining the current value of a property under appeal. Any decision on current value determined by the Board must be made on the best evidence available at the hearing.

30Where there is no sale of the subject property occurring on or near the valuation day, the next best indicator of current value are the sales values of suitably comparable properties. In developing its opinion of value, MPAC made reference to seven separate sales of properties it deemed to be suitably comparable to the subject property to determine its current value.

31Ultimately, MPAC relied on the time adjusted, per square foot values of four sales of slab on grade dwellings that occurred from July 2015 to June 2017. MPAC took this approach after considering the sales of three properties that sold in a similar time span that represented more conventional construction where a single-storey dwelling is constructed over a full basement.

32MPAC testified that the standard, finished basement value applied in the Kingston Region is $28 per square foot, and that this value applies only to the 'finishing' of the basement. It does not reflect any of the value attributed to the actual construction of the basement structure or any of the functional utility aspects typically attributed to basements like plumbing and electrical infrastructure and the foundational structure of the basement floor and walls. In MPAC's mass appraisal system, those functional aspects of the basement level are already included in the current value of the dwelling as a whole.

33MPAC's was the only documentary evidence available to the Board on the question of current value. None of the seven sales relied on by MPAC are determinative on their own of a current value of the subject property. In that regard, the Board agrees with the Appellants, in that none of the sales in evidence are directly comparable to the subject property. However, there are other means of comparison available to the Board that rely on the sales data adduced by MPAC.

34A common means of comparison in determining current value is the method of 'bracketing', where the Board determines the value or values of inferior properties and those of superior properties to determine a range within which a reasonable current value would lie for a property under appeal. In this case, the bracketing method is more complex, owing to the disparity of characteristics among the comparable properties being considered.

35For instance, the four sales in evidence of slab on grade dwellings comprise between 34% and 45% of the floor area at the subject property. MPAC used these sales to arrive at a median or average value per square foot and applied that result to the 4,734 square feet at the subject property. The Board disregards this approach in part, for the following reasons:

• Two of the properties in MPAC's Data Set No. 2, Crossfield and Sydney are in urban settings with much smaller lots and with municipal services whereas the subject property is in a rural area of the municipality.
• The time adjusted, per square foot sale values of the two remaining properties of $214 and $231 have not been adjusted for economies of scale. These two properties are less than half of the square footage of the subject property.

36However, the average of the two per square foot values has some value in the bracketing exercise. If this average value of $222 (rounded) is applied to the subject property's area of 4,734 square feet, the result is $1,051,000 (rounded). The Board has no evidence of what impact the application of economies of scale would be to this value. It does indicate however, the top end of a range of value that could be attributed to the subject property. Put another way, based on the evidence available of slab on grade construction the current value, on a balance of probabilities would be less than $1,051,000.

37The Board considers then, the evidence to support the lower end of the range of current value demonstrated by the evidence. MPAC's Data Set No. 1 includes three comparable properties. The Board disregards the third property in this set, 175 Deer Creek Drive as it is nearly twice the distance as the other two properties from the subject property. The Board also disregards the second property in that set at 618 River Ridge Drive as it is 35 years older that the subject property and has 3,641 square feet of living area on the main floor and finished basement; 1,093 square feet less than the total living area of the subject property.

38The data of the remaining property at 1441 English Way indicates that, including areas on the main floor and the finished basement the total living area is 4,976 square feet. The time adjusted sale price of 1441 English Way is $751,745. The per square foot of living area value resulting is $151. As a measure of the current value of the subject property, this value per square foot of living area assumes that the same value would apply to the finished basement as it does to the main floor.

39The only evidence regarding the difference in value for main floor versus finished basement living areas is that of MPAC where the value of $28 per square foot of finishes was adduced. As indicated above, this doesn't specify the entire current value of living area below the main floor, only the difference in value contributed by the finishes. However, the Board can accept that living area provided below grade, with its inherent lack of natural light, more limited access and egress to the exterior and access by stairs strongly supports the premise that living areas in basements are of less value than living areas on the main floor.

40Given that premise, it is logical to accept that, as is the case of 1441 English Way, where the value attributed to both levels is assumed to be equal, the resultant value per square foot would represent a value that is lower than if all of that living area were on the main floor. This is helpful in the bracketing exercise in that the Board can accept that the resulting current value produced would be at the low end of the current value for the subject property.

41When the time adjusted sale value per square foot of living area at 1441 English Way, of $151 is applied to the 4,734 square feet at the subject property the result is $714,834 or $715,000, rounded.

42The Board now has a range of value that can logically be applied to the subject property to arrive at its current value. That value lies within the range of $715,000 and $1,051,000. In the absence of any specific evidence as to where in the range the subject property should lie, the Board adopts the midpoint of that range as the most likely value to represent the correct current value of the subject property. That mid-point is $883,000.

Issue 2 – Does the current value determined require a reduction for it to be considered equitable assessment when reference is made to the assessments of similar lands in the vicinity?

The Appellant's Evidence and Submissions

43The Appellants compared the assessments of two properties they consider to be similar to the subject property. The first is 1078 Middle Road which is described as a site of 18 acres, improved with a dwelling of 3,250 square feet. The Appellants submit that the difference in assessment between the subject property and 1078 Middle Road is $264,000 (equating to approximately $178 per square foot) is too high. The Appellants also submit that 1078 Middle Road has a two-bay detached garage with a loft on the property; all of which would suggest the assessment of the subject property is too high.

44The second property cited by the Appellants is 1600 Highway 2. This property is a single storey dwelling with a full basement. It has finished living area of 2,685 square feet of living area on each level. The appellants submit that this equates to 5,370 square feet of living area, or 636 square feet more than the subject property. The Appellants submit further that 1600 Highway 2 is assessed at $362,900 lower than the subject property which would suggest the subject property is assessed too high.

MPAC's Evidence and Submissions

45MPAC responded first to the Appellant's assertions with respect to the two properties cited as evidence that the current value determined for the subject property ought to be reduced for it to be equitable.

46MPAC testified that 1078 Middle Road may have a secondary structure but that the assessment returned at the property does not include the value of that structure. MPAC noted that an open building permit was identified at 1078 Middle Road but that any value attributed to the structure subject to that permit was not on the roll for 2023. Further, MPAC submitted that 1078 Middle Road is partially assessed as farm land used for farm purposes and that farm land is assessed differently than residential land.

47MPAC testified that 1600 Highway 2 is classified as managed forest with some additional land exempt as conservation land, noting that properties in those conditions are assessed differently from residential properties. MPAC also submitted that living areas are calculated on the main level and above and comparing living areas on the basement level would be inconsistent with the current values determined by MPAC.

48MPAC concluded its responses to the Appellants by submitting that neither property adduced is similar enough to the subject property, owing to land use and building type to be used as a means of reducing the current value determined for the purposes of equitable assessment.

49MPAC also submitted its own evidence on equitable assessment, comprised of an Assessment to Sales Ratio ("ASR") study. This study included the assessments of 30 single family residential properties that sold in 2015 or 2016, and compared those assessments to their respective time adjusted sale values. The result of each separate comparison is known as the ASR for that property sale. MPAC testified that when an ASR study results in a median ASR of between 0.95 and 1.05, MPAC considers the assessments within the property type studies to be equitable. The median ASR in MPACs equity study is 0.97.

Findings on Issue 2

50The onus of burden of proof of a reduction in a current value for the purposes of equitable assessment is with the Appellant. While the two properties cited by the Appellants may look similar to the subject property, they are assessed differently. In order for the Board to make a reduction in a current value for equitable assessment, the properties referenced must be in the vicinity and similar. The Board finds that the properties cited are not suitable similar to the subject property because they are assessed in different property classes.

51MPAC's ASR study indicates a median ASR of 0.97. meaning that on a balance of probabilities, similar residential properties in the vicinity of the subject property are assessed at 97% of their current value, as reflected in their respective time adjusted sale process. In this comparison, the time adjusted sale prices, by definition, reflect current vale as they represent "...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."

52For the Board to make a reduction in the correct current value for the purposes of equitable assessment, the Board requires clear evidence that such a reduction is required to achieve equitable assessment. The Board finds that MPAC's study does not provide such clear evidence as the level of assessment indicated in its study for similar properties in the vicinity is very close to 1.00.

53Accordingly, the Board finds that there is no evidence to support a reduction in the current value determined for it to represent equitable assessment.

CONCLUSION

54The Board finds that the correct current value of the subject property is $883,000. The Board also finds that there is no evidence to support a reduction in this value to achieve equitable assessment. The Board notes that MPAC is not seeking an increase in assessment in this appeal. The current value determined is sufficiently close to the value returned that the Board is satisfied either value correctly represents current value in this case.

ORDER

55The Board orders therefore that the assessment of the subject property at 1406 John F. Scott Road is confirmed as returned at $866,000, in the Residential property class for the 2023 and 2024 taxation years.

"Dan Weagant"

DAN WEAGANT MEMBER Assessment Review Board

Website: www.tribunalsontario.ca/arb