Tribunals Ontario

Tribunaux décisionnels Ontario

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: January 17, 2024

FILE NO.: WR 185647

Assessed Person(s): Ministry of Transportation

Appellant(s): HK Travel Centres

Respondent(s): Municipal Property Assessment Corporation Region 16

Respondent(s): Town of Innisfil

Property Location(s): 6400 Highway 400

Municipality(ies): Town of Innisfil

Roll Number(s): 4316-010-001-12400-0000

Appeal Number(s): 3386859, 3407345, 3446358, 3489311 and 3513194

Taxation Year(s): 2019, 2020, 2021, 2022 and 2023

Hearing Event No.: 781264

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

APPEARANCES:

Parties	Counsel*/Representative
HK Travel Centres	Kenneth R. West*
Ministry of Transportation	No one appeared
Municipal Property Assessment Corporation	Melissa VanBerkum* and Jaime Shevchuk
Town of Innisfil	Submissions not received

HEARD: September 19 to 21, 2023 by video conference with additional submissions in writing on various dates ending November 17, 2023.

ADJUDICATOR(S): Carly Stringer, Member

DECISION

OVERVIEW

1These appeals relate to the assessment of 6400 Highway 400 in the Town of Innisfil, Ontario (the “Subject Property”).

2The Subject Property is owned by the Crown in Right of Ontario. HK Travel Centres (the “Appellant”) occupies a portion of the Subject Property, operating an OnRoute highway service plaza (“OnRoute”).

3The Appellant submits that the Municipal Property Assessment Corporation (“MPAC”) has assessed the Subject Property too high and the assessment should be $4,835,000 for 2019 to 2021 taxation years and $4,989,000 for the 2022 and 2023 taxation years.

4MPAC is responding to these appeals. MPAC asks the Assessment Review Board (“Board”) to increase the assessed value to $8,069,000 for the 2019 to 2021 taxation years and $8,223,000 for the 2022 to 2023 taxation years.

5The other responding party, the Town of Innisfil, did not participate in the hearing or provide submissions to the Board.

Background and Description of the Subject Property

6The Subject Property is adjacent to Highway 400 with dedicated exit and entry ramps onto the highway. It is 89.78 acres in size.

7The OnRoute occupies the north-east of the Subject Property. It was built in 2015, and provides various facilities to the traveling public including restrooms, parking, a gas bar, a food court, a convenience store, and a picnic area. A standalone Starbucks was added for the 2022 taxation year.

8In addition to the OnRoute, a portion of the site is farmed and a portion is excess commercial land.

Issues for the Hearing

9At issue in this proceeding is:

1. What is the correct current value of the Subject Property as of January 1, 2016?
2. Should an equity adjustment be applied and, if so, how much?

Result

10The Board finds that the correct current value of the Subject Property as of January 1, 2016 is $8,069,000 for the 2019 to 2021 taxation years and $8,223,000 for the 2022 to 2023 taxation years.

11The Board finds that no equitable adjustment is required.

PRELIMINARY ISSUES

The Appellant’s Expert

12MPAC submits that the Board cannot rely on any of the opinion evidence provided by the Appellant’s witness. The Board will address this submission as a preliminary issue.

Testimony at the Hearing

13At the hearing of these appeals, the Appellant sought to qualify its witness as an expert in Ontario assessment. During MPAC’s cross-examination on the proposed qualification, MPAC asked the witness two questions:

a. whether he had ever been qualified as an expert before this Board; and b. whether he had ever been qualified as an expert before any other tribunal or court.

14The witness provided his answers to these two questions, and MPAC accepted the qualifications and parameters of the witness’ expertise without any further inquiries. The Board subsequently ruled that it was satisfied that the witness had the education, training, skills, and experience to be qualified as an expert to give opinion evidence regarding property assessment in Ontario: see Transcript of the Hearing, September 20, 2023, pages 8 to 9.

15The Appellant’s witness then provided his evidence-in-chief. Afterwards, the following exchange occurred between counsel for MPAC and the witness during MPAC’s cross-examination:

Q. And you signed an acknowledgment of expert duty, correct? A. Correct. Q. And do you understand what that duty is? Who -- A. Yes. Q. - do you owe the duty to? A. The Board and the parties. Q. No, sorry, who do you owe the duty to? Who do you owe your duty to? Counsel for the Appellant: Sorry, perhaps you can take him to the document, Ms. VanBerkum. Counsel for MPAC: Yes. He signed it. This is my cross, I don't take instructions from counsel, unless my friend has an objection. Q. What's the duty that you – to whom do you owe your expert's duty, Mr. Joyce? A. To -- "duty afforded to above prevails over any obligation which I may owe to any party by whom or on whose behalf I am engaged." Q. Sorry. Just, which party? Which person or entity do you owe your expert duty to in this proceeding? A. HK Travel.

MPAC’s Submissions

16MPAC submits that the Appellant’s witness’ statement that he owes a duty to HK Travel demonstrates that he lacks the impartiality and objectivity required of an expert witness. MPAC submits that the Appellant’s witness misapprehended his duty as an expert, and therefore failed to meet the required standards of his duty to the Board. MPAC submits that this failure does not simply go to the weight that should be given to his opinion evidence, but rather means that the Board cannot rely on any of his opinion evidence.

Appellant’s Submissions

17The Appellant has not provided submissions on this issue.

Findings on the Preliminary Issue

18The Board does not accept this challenge to the Appellant’s expert evidence for the following reasons:

a. MPAC did not ask the witness about his understanding of his expert duty during cross-examination at the pre-qualification stage. Instead, MPAC only asked the witness whether he had been previously qualified as an expert. Following this brief cross-examination, MPAC unequivocally accepted the witness’ qualifications to provide opinion evidence on property assessment in Ontario and the Board found him qualified. The Board finds that MPAC had the opportunity at the hearing to challenge the witness’ qualification to provide opinion evidence but did not do so. Accordingly, the Board will not rescind its earlier ruling.

b. Regarding the witness’ statement that he owes an expert duty to HK Travel, the Board will consider this evidence in context. This context includes:

i. The Appellant’s witness executed an Acknowledgment of Expert’s Duty in which he acknowledged i) a duty to provide opinion evidence that is fair, objective, non-partisan, and related only to matters within his area of expertise; and ii) that this duty prevails over any obligation to any party by whom or on whose behalf he is engaged.

ii. He was asked about his expert duty three times during MPAC’s cross-examination. He initially testified that he owes a duty to “the Board and the parties.” When asked the question a second time, he answered by reading out loud from a section of his signed Acknowledgement of Expert Duty. It was not until MPAC asked him a third time that he stated he owed a duty to HK Travel.

iii. His evidence was delivered in a fair, impartial, and forthright manner without indication that he was influenced by the belief that he owed a duty to his client over the Board. In this regard, the Board finds there is insufficient evidence of actual impartiality towards the Appellant.

19For these reasons, the Board does not accept MPAC’s submission that it cannot rely on the Appellant’s witness’ opinion evidence. The Board does not accept MPAC’s submission that the Appellant’s witness failed to meet the standards of his expert duty to the Board. The Board does find, however, that the impugned testimony will be considered when determining what weight should be given to the Appellant’s witness’ opinion evidence.

ANALYSIS

Issue 1 - What is the correct current value of the Subject Property as of January 1, 2016?

Applicable Law

20In accordance with s. 44(3) of the Assessment Act R.S.O. 1990, c. A.31 (“Act”), the Board must determine the value at which the Subject Property shall be assessed.

21This requires the Board to determine the “current value of the land” [s. 44(3)(a) of the Act] and “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” [s. 44(3)(b) of the Act].

22Section 1 of the Act defines “current value” as “the amount of money the fee simple, if unencumbered, would realize if it sold at arm’s length by a willing seller to a willing buyer”. Section 19.2(1) of the Act confirms that the valuation day for the taxation years under appeal is January 1, 2016.

Valuation Methodology

23The Parties agree, and the Board accepts, that the highest and best use of the Subject Property is its current use.

24The Parties agree, and the Board accepts, that the Cost Approach is an appropriate way to determine current value of the Subject Property.

25The Cost Approach represents a theoretical breakdown of the property into its land and building/improvement components.

26With respect to the improvements on the Subject Property, the Parties agree, and the Board accepts, that the value of the improvements is as provided in MPAC’s expert report.

27The dispute between the Parties on Issue 1 centers on the land value component of the Cost Approach.

Evidence and Submissions on Land Value – MPAC

28MPAC provided evidence that the Subject Property sold as vacant land on August 21, 2013 (the “2013 Subject Sale”). MPAC’s expert opined that the time-adjusted sale price of $4,636,000 is the best market evidence of value of the Subject Property as no utility or location adjustments are needed.

29MPAC submits that the 2013 Subject Sale is the best indication of value since there is no change to the property or market, and that substantial evidence is required to refute the presumption that the 2013 Subject Sale is the best evidence.

30With respect to apportionment between property classes, MPAC’s expert opined that the Subject Property has three distinct uses: a farmed area, an excess area and the OnRoute commercially developed area. He testified that the farmed area represents 51 acres of the site; the OnRoute represents 18.5 acres; and the excess is 20.28 acres. He testified that the farmed area and the excess area have the lowest utility, and determined a rate of $11,865 per acre for these two areas based on the rate that was applied in the original assessment as supported by sales evidence.

31He then subtracted the values of the excess area (20.28 acres x $11,865/acre = $240,622) and farmed area (51 acres x $11,865/acre = $605,115) from the time-adjusted sale price of the Subject Property ($4,636,000) ($4,636,000 - $240,622 - $605,115 = $3,790,263). The remaining value of $3,790,263 was apportioned to the OnRoute.

MPAC’s Apportionment Evidence

Land Use	Acres	Rate	Land Total	Total Value (Land + Improvement)
Commercial	18.50	$204,879	$3,790,263	$7,377,672
Excess	20.28	$11,865	$240,622	$240,622
Farmed	51.00	$11,865	$605,115	$605,115

Evidence and Submissions on Land Value – Appellant

32The Appellant submits that MPAC’s land rate cannot be reconciled with the sales in the area. The Appellant submits that MPAC presented no evidence of the value of land in the area except for the governmental acquisition of the Subject Property that was not exposed to the market.

33With respect to the remainder of the Appellant’s submissions, the Board finds that the Appellant’s written submissions are not consistent with the evidence provided by the Appellant’s expert witness. For this reason, the Board will summarize the Appellant’s written submissions first, followed by the expert evidence.

34The Appellant submits that both experts agreed that approximately 51 acres of the 89.78 acre site are farmed: see paragraphs 5, 45, 46 and 57 of the Written Submissions of the Appellant HK Travel Centres dated October 20, 2023 (“Appellant’s Submissions”); see also paragraphs 7, 8, 11 and 13 of the Written Submissions of the Appellant HK Travel Centres dated November 17, 2023 (“Appellant’s Reply”).

35At paragraph 6 of the Appellant’s Submissions, the Appellant asks the Board to find:

a. that local area land sales indicate a price per acre of $20,557; b. that the 51 acres of farmed area has a farm land rate of $11,865 pursuant to s. 19(5) of the Assessment Act equaling $605,115; and c. that the remaining 38.78 acres should have a value of $797,200, being 38.78 acres x $20,557.

36In contrast, the Appellant’s expert wrote in his expert report, and confirmed in his evidence-in-chief at the hearing, that he and MPAC’s expert do not agree on the value for the farmed area or the excess commercial: see Exhibit 5, Expert Report on behalf of the Appellant dated September 12, 2022 (“Appellant’s Expert Report”) at paragraphs 25 and 29; and Transcript of the Hearing, September 20, 2023, page 46, lines 2 to 6. The Appellant’s expert wrote in the Appellant’s Expert Report, and confirmed in his evidence-in-chief at the hearing, that 12.93 acres of land are commercial, 3.12 acres are commercial excess, and the remaining 73.73 acres should be residential: see paragraph 25 of the Appellant’s Expert Report; see also Transcript of the Hearing, September 20, 2023, page 41, line 22 to page 46, line 6.

37The Appellant’s Expert Report relied on four property sales (including the Subject Property). Using these sales, the Appellant’s expert calculated a median time-adjusted sale price per acre of $20,557.

Appellant’s Proposed Comparable Properties Information

Property	Subject Property	Roll 431601000122600	Roll 431601000116900	Roll 431601000102800
Sale Date	August 2013	October 2012	June 2015	June 2013
Sale Amount	$4,000,000	$1,700,000	$480,000	$940,000
Site Area (Acres)	89.78	90	27*	98.56
Time Adjusted Rate per Acre	$51,211	$22,719	$18,394	$11,090
Notes			*Testified that this is the acreage of the “usable” lands, as there is a further 102 acres that are zoned Environmentally Protected: see Transcript of Hearing, September 20, 2023 at page 22, line 14 to page 23, line 25.

38In the Appellant’s Expert Report, he applied the $20,557 land rate to develop an apportionment based on 3.12 acres of excess commercial (3.12 acres x $20,557 = $64,137), 12.93 of commercial (12.93 acres x $20,557 = $265,800) and 73.73 acres of residential (73.73 acres x $20,557 = $1,515,658¹): see Appellant’s Expert Report at paragraph 29. The Appellant’s expert testified that his calculation of 12.93 acres of commercial land excluded the OnRoute picnic area.

39His evidence changed somewhat in cross-examination. With respect to the 73.73 acres of residential land, the Appellant’s expert stated under cross-examination that, in fact, 51 acres is being actively farmed. He later stated that 22.73 acres is excess: see Transcript of the Hearing, September 20, 2023 at page 76, line 21 to page 79, line 20 and page 92 lines 6 to 24.

40The Appellant’s expert did not agree with MPAC that a rate of $11,865 should be applied to the farmed area: see the Transcript of the Hearing, September 20, 2023, page 41, line 22 to page 46, line 6. He specifically confirmed at the hearing that paragraph 2 of his Supplementary Report on Behalf of the Appellant dated February 14, 2023 should not be interpreted as agreement with MPAC’s rate of $11,865 per acre for farm land, but was just to show what the assessor had done: see Transcript of the Hearing, September 20, 2023, page 39 at lines 5 to 20; page 43 at lines 2 to 23; page 44 at line 11 to page 45 at line 8; and page 45 at line 19 to page 46 at line 6.

41With respect to apportionment, the Appellant submits that MPAC seeks to arbitrarily and disproportionately allocate almost the entire purchase price to only 18 of the Subject Property’s 89 acres.

Findings on Land Value

42The Board finds that little to no weight should be placed on the Appellant’s expert evidence and does not accept the Appellant’s submissions on land value, for the following reasons:

a. The Board finds that some of the Appellant’s expert evidence is contradictory and/or inconsistent, including:

i. He testified that the 2013 Subject Sale was “suspect” and alleged it was not listed on the open market, but then relied on the 2013 Subject Sale, without adjustment or caution, in his calculation of the land rate: see Transcript of the Hearing, September 20, 2023, page 26 at lines 20 to 23.

ii. In the Appellant’s Expert Report and evidence-in-chief, he stated that there is 73.73 acres of residential land and 3.12 acres of excess, but then stated in cross-examination that 51 acres is being actively farmed and 22.73 acres is excess: for context, see Transcript of the Hearing, September 20, 2023 at page 76, line 21 to page 79, line 20; page 76, line 21 to page 79, line 20; and page 92 lines 6 to 24.

iii. In the Appellant’s Expert Report and evidence-in-chief, he stated that the same land rate should apply for all areas of the property. However, in cross-examination he stated that the excess land and farm land should have the same rate because “they have less utility”: see Transcript of the Hearing, September 20, 2023 at page 86, lines 2 to 10.

b. The Board finds the Appellant’s calculation of the acreage is unreliable. The Appellant’s expert did not include the picnic area as part of the OnRoute operation, despite providing evidence in cross-examination that the picnic area is both available for use by the customers of the OnRoute, and managed and operated by the Appellant.

c. The Board finds that the Appellant’s proposed comparable properties are not reliable indicators of value. Two of the proposed comparable sales occurred too far from the January 1, 2016 valuation day to be reliable indicators of value. Two of the sales included environmentally protected lands, which do not feature on the Subject Property. One of the properties is a single-family residence, which is not comparable. Two of the properties do not have highway access. Further, the values listed in Appendix B of the expert report are not consistent, as some values were representative solely of the land while others included improvements. The site area is also not consistent, as the Appellant’s expert confirmed that for one property, he listed the site area as 27 acres of “usable” land when the correct area is 102.48 acres.

d. Finally, in submissions, the Appellant has requested that the Board apply two different land rates, $20,557 per acre for “non-farm” and $11,865 per acre for “farm”, which is not supported by the Appellant’s expert evidence applying a single land rate per acre for the entire Subject Property.

43The Board finds that MPAC’s expert provided the best evidence of land value. The Board prefers, accepts, and relies on MPAC’s expert evidence for the following reasons:

a. The Board does not accept the Appellant’s submission that the 2013 Subject Sale should not be used. There is no evidence before the Board that the Crown was compelled to purchase the Subject Property, or was authorized to pay anything more or less than market value. Notably, the Appellant’s submission impugning the 2013 Subject Sale is inconsistent with its own expert evidence. Despite the Appellant’s submissions that the Board should not rely on the 2013 Subject Sale, the Appellant’s own expert used it to calculate his land rate: see Appellant’s Expert Report at paragraph 29 and Appendix B; see also Transcript of the Hearing, September 20, 2023, page 26 at lines 20 to 23.

b. The Board finds that the 2013 Subject Sale is the best available evidence of land value. The property was unimproved vacant land at the time of sale. It requires no adjustment for location or any factor other than time. The Board therefore finds that the land value is $4,636,000, which is the 2013 Subject Sale price time-adjusted to the January 1, 2016 valuation day.

c. With respect to apportionment of the land value, the Board accepts and relies on MPAC’s expert evidence. The Board finds that the undeveloped lands (the “Excess Commercial” and “Farm” Areas identified by MPAC’s expert) should get the same land rate per acre, which would be a lesser land rate than the “Commercial” area (the OnRoute) to reflect the lesser utility. The Board accepts and relies on MPAC’s expert evidence, as supported by sales evidence in MPAC’s expert report, and finds that the apportionment of $11,865 per acre to the “Farm” and “Excess Commercial” areas is reasonably correct. The Board accepts and relies on MPAC’s expert evidence and finds that the apportionment of $3,790,263 to the “Commercial” area is reasonably correct.

d. The Board accepts and relies on MPAC’s expert’s estimation of acreages to apply to the apportionment of value. He estimated the areas on the basis of aerial maps, and his estimation is consistent with the wording of the agreement which defines the OnRoute site.

Conclusion on Issue 1

44Therefore, the Board finds that the land value is $4,636,000, apportioned as follows:

a. Farm $605,115 b. Excess Commercial $240,622 c. Commercial $3,790,263

45Adding the land values to the agreed improvement values, the Board finds that the current value of the Subject Property for the 2019 to 2021 taxation years is in accordance with MPAC’s expert’s opinion of value, being $8,069,000 for the 2019 to 2021 taxation years and $8,223,000 for the 2022 to 2023 taxation years.

Issue 2 - Should an equity adjustment be applied and, if so, how much?

Applicable Law

46Section 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 and Submissions on Equitable Adjustment - Appellant

47The Appellant submits that market participants could buy an 89-acre lot in or around the Subject Property in the range of $11,000 and $22,000 and have it assessed for somewhere between $5,000 to $27,000 per acre and, therefore, it would be inequitable to assess the land of the Subject Property at anything different because it is owned by the government and not subject to local zoning bylaws.

48The Appellant submits that it provided evidence of similar properties within 12 kilometres of the Subject Property.

49The Appellant’s Expert Report provided the following evidence on equitable adjustment:

a. He calculated an assessment to sale ratio (“ASR”) of 0.57 based on the four property sales he relied on for the land rate (see chart at paragraph 37). He applied this 0.57 ASR to his land rate of $20,557 per acre, resulting in a proposed equitable land rate of $11,628 per acre. He applied this to the total acreage of the Subject Property and added the agreed improvement value to arrive at a proposed equitable assessment of $4,300,000: see Appellant’s Expert Report at paragraph 32.

b. He posited an alternative approach of reviewing the assessments of other properties. He located two proposed comparable properties and determined a median assessment per acre of $14,097. Applying this land rate to the Subject Property’s acreage, he determined a proposed equitable assessment of $4,522,342: see Appellant’s Expert Report at paragraph 34.

c. As a “final check”, he reviewed all lands owned by the Ministry of Transportation in the Town of Innisfil. He stated that this analysis revealed that MPAC was valuing similar lands at a land rate of $26,345 per acre. He applied this land rate of $26,345 per acre to the Subject Property’s acreage and determined a proposed equitable assessment of $5,633,548: see Appellant’s Expert Report at paragraph 37.

d. His final opinion of the correct and equitable 2016 current value assessment was $4,522,000: see Appellant’s Expert Report at paragraph 44.

50Under cross-examination, the Appellant’s expert testified that his final opinion of value is $5,633,000 and a land rate of $26,345 per acre, based on the lands at Appendix C of the Appellant’s Expert Report being those lands owned by the Ministry of Transportation in the Town of Innisfil: see Transcript of the Hearing, September 20, 2023 at page 93, line 17 to page 94 line 6; and page 96 lines 19 to 25.

Evidence and Submissions on Equitable Adjustment – MPAC

51MPAC’s expert analyzed the ASRs of 30 properties and determined an adjustment for equity is not warranted based on a median ASR of 0.97.

52MPAC submits that there is no evidence that an adjustment for equity is warranted in this case and the Board should decline to make one.

Findings on Issue 2

53With respect to the evidence required to satisfy the Board that an equitable adjustment is required, “the Board must have convincing evidence on equitable assessment to reduce an otherwise correct current value”: see Vale Canada Limited v Municipal Property Assessment Corporation, Region 30, 2022 CanLII 48461 (ON ARB) at paragraph 84.

54The Board finds that the Appellant has not provided it with sufficiently convincing evidence that an equitable adjustment is required. Specifically, the Board finds that:

a. The Board puts little to no weight on the Appellant’s expert’s evidence, for the reasons outlined in relation to Issue 1 above. The inconsistencies in the Appellant’s expert evidence continued in relation to equitable adjustment, including that the Appellant’s expert failed to explain the difference in his final opinion of value in his expert report (which was $4,522,000) and at the hearing ($5,633,000 and a land rate of $26,345 per acre).

b. Further, the Appellant’s expert limited his equity analysis to the land value component only. He developed three possible approaches to equity in his report, but did not apply an adjustment to the structure value in any of those three approaches. The Board does not accept this approach.

c. The Board is not persuaded by the Appellant’s expert’s final opinion of an equitable value based on the assessments of land owned listed in Appendix C of the Appellant’s Expert Report. The Appellant’s expert testified that none of the properties in Appendix C were on or directly adjacent to a 400 series highway. Four of the properties listed in Appendix C are not owned by the Ministry of Transportation – the owner is “Innisfil Town.” None of the properties are comparable to the Subject Property with respect to large acreage – the properties in Appendix C vary in acreage from between 6.06 to a maximum of 48.45 acres, much smaller than the Subject Property. Finally, the remaining seven properties in Appendix C are not in Innisfil. The Board finds that the properties in Appendix C are not sufficiently similar nor in the vicinity for the purposes of s. 44(3)(b) of the Act.

55In the absence of convincing evidence demonstrating that a reduction in the current value assessment is required to make it equitable with the assessments of similar lands in the vicinity, the Board finds that no equitable reduction is required.

CONCLUSION

56The Board finds that the current value assessment of the Subject Property is $8,069,000 for the 2019 to 2021 taxation years and $8,223,000 for the 2022 to 2023 taxation years. The Board finds that no equitable reduction is required.

ORDER

57The Board orders that the assessment be increased as follows:

[58]

Tax Year	Commercial (COM XP)	Excess Commercial (ECL XQ)	Farm (FL RP)	Total Value
2019-2021	$7,223,300	$240,600	$605,100	$8,069,000
2022-2023	$7,377,300	$240,600	$605,100	$8,223,000

Footnotes

1. 1The Appellant’s expert stated $1,515,658 however by the Board’s calculation 73.73 x $20,557 = $1,515,667)