Docket: LT00002
Order LT00-03IN THE MATTER an appeal by Iris Jamieson against a decision by the Provincial Treasurer with respect to the 2000 assessment of Provincial Property Number 640441, located in Charlottetown, P.E.I.
BEFORE THE COMMISSION
on Thursday, the 5th day of October, 2000.
Ginger Breedon, Vice-Chair
Norman Gallant, Commissioner
Arthur Hudson, Commissioner
Order
ContentsAppearances & Witnesses
Reasons for Order
1. Introduction
2. Discussion & Findings
3. Disposition
Order
Appearances & Witnesses 1. For Iris Jamieson (the Appellant)Andy Jamieson
2. For the Provincial Treasurer (the Respondent)
Eugene Power
Kevin Dingwell
Reasons for Order
1. IntroductionThis is an appeal under Section 22.(1) of the Real Property Assessment Act, R.S.P.E.I. 1988, Cap. R-4, (the Act) by Iris Jamieson (the Appellant) against a decision of the Provincial Treasurer (the Respondent) with respect to the 2000 assessment of Provincial Property Number 640441 located in Charlottetown.
According to the Respondent's submission, the subject property is located at municipal address 33 Irwin Drive and contains approximately .3018 acres. The subject property is irregular shaped and is improved with a split entry type structure with 1,970 square feet of living area and an attached garage.
The assessment history of the property is as follows:
YEAR
ASSESSMENT
1996
$107,600
1997
$109,600
1998
$109,600
1999
$111,000
(varied to $109,000 on referral)2000
$109,000
By Notice of Appeal dated July 24, 2000 the Appellant appealed the 2000 assessment of the subject property to the Island Regulatory and Appeals Commission (the Commission). The assessment value under appeal is $109,000.
After suitable scheduling for the involved parties, the Commission heard the appeal on September 28, 2000.
The Respondent made a further submission to the Commission on October 3, 2000 and the Appellant filed a response to this submission on this same date. The Commission took these into account in reaching its decision.
2. Discussion & Findings
A. The Appellant
The Appellant's position may be summarized as follows:
In the Notice of Appeal (Exhibit A1) the Appellant states –
Again, market values have not increased – since tax assessments are supposed to be based on market value assessments should not have increased in 1999 and such increases wrongly assessed have been carried forward to 2000.Based on arguments presented during the hearing, the Appellant submits that the market value of the subject property has not increased and therefore the assessment should not increase.
The Appellant notes that the subject property was purchased in 1990. A small community park is located at the back of the subject property. Initially the park was well maintained. In recent years, however, the park has deteriorated. The Appellant submits that the park, in its present condition, reduces the value of the subject property.
The Appellant also submits that, from time to time, there is an offensive odor believed to originate from the Industrial Park. The Appellant states that this odor is carried to the subject property by the prevailing northwest winds. In addition, the Appellant also notes noise from trucks ascending a nearby hill, as well as sounds from an outdoor loudspeaker. The Appellant contends that the offensive odor and noise reduce the value of the subject property.
The Appellant notes that there is a ten-foot easement (Exhibit A3) for a storm sewer on the subject property. The Appellant submits that this easement, which as yet remains unused, reduces the value of the subject property.
The Appellant argues that the Minister did not consider the condition of the park, the odor, the noise and the easement in preparing the assessment of the subject property. The Appellant states that there is no mention of the aforementioned factors in the Assessment Valuation Summary (Exhibit R1) or the Real Property Records Division Working Document (Exhibit R2).
The Appellant also notes that the roofing shingles on the subject property have curled up and need to be replaced soon. The Appellant contends that the condition of the roof also reduces the market value of the subject property.
The Appellant submits that property values have historically not increased in the subdivision where the subject property is located. The Appellant argues that the market value of the subject property has not increased; therefore, the assessment of the subject property should also not increase. The Appellant submits that a reasonable current assessment for the subject property would be $105,000.
B. The Respondent
The Respondent's position may be summarized as follows:
The Respondent takes the position that the subject property has been assessed using a standard approach in accordance with the provisions of the Act and that the assessment is based on the concept of uniformity and market value. According to the Respondent's Assessment Valuation Summary, identified as Exhibit R1, the 2000 assessment was derived using the cost approach with market factor adjustments.
The Respondent notes that an analysis of 1998 – 1999 sales of comparable homes indicates that the subject property is assessed uniformly with other properties in the area. The Average Assessment Sales ratio of these properties is 91.5% (Exhibit R1, page 12). The indicated market value for the subject property, based on sales of units of similar size, age, condition and location, is $120,000 (Exhibit R1, page 14). The Respondent also notes that the sales information provided for all types of properties located in the various subdivisions of West Royalty (Exhibit R1, page 13), indicates that the subject property is not over-assessed in terms of what it could command on the open market, given the proper exposure to potential purchasers. The average assessment / sales ratio for these properties is 94.5%.
The Respondent therefore submits that, if the assessment / sales ratios in the area of the subject property are applied to the indicated market value of the subject property, the assessed value should be in the range of $109,000 to $113,2000.
The Respondent states that a property is usually inspected once every ten years. In between inspections, the assessor looks at the sales of residential properties in the area and examines the assessment / sales ratio. If the sale price is higher than the assessment value, this indicates that the assessments should be increased. The Respondent acknowledges that increases in assessment may occur in years in which the market price has remained stable or even decreased; this can happen when the spread between market price and assessment value is being narrowed. The Respondent submits that market value does not have to increase for the assessment to increase as long as the assessment is at or below the market value.
The Respondent explains that upon inspection and re-assessment, the assessor notes the physical attributes of the building. The Respondent submits that blighting factors such as easements, noise and odor concerns are addressed through the market. If a significant blighting factor exists, it will likely affect the market value.
The Respondent submits that it calculates the assessed value of a property based on a valuation of the land, improvements to the land (such as a well, paving and landscaping) and a valuation of the various components of the building as per the Real Property Records Division Working Document (Exhibit R2). Depreciation is factored on the building and an adjustment multiplier, in this case 1.77, is used to bring the base value up to the current assessed value. Referring to the summary contained on page 8 of Exhibit R1, the Respondent notes the value of the improved lot as $28,800, the total building value as $80,200 (rounded down from $80,227) for a total non-commercial realty assessment of $109,000.
While the Respondent notes that page one of Exhibit R2 suggests the subject property was inspected on April 19, 1990, the subject property was actually physically inspected twice since that time: most recently in 1999 at the time of the last referral. The Respondent states that the date in the field on page one of Exhibit R2 should be the date of last inspection and this date should have been changed.
The Respondent outlined a step by step review of the valuation process contained in Exhibit R2, including an explanation of the grading system, depreciation and the adjustment multiplier.
The Respondent submits that upon referral, the Appellant's 1999 assessment of the subject property was reduced from $111,000 to $109,000 because of the presence of some interior wall cracks and the need for interior painting. These defects were then accounted for by increasing the depreciation on the subject property.
The Respondent submits that the 2000 assessment of the subject property follows the legislative requirements of market value and uniformity, as set out in the Act.
The Respondent concludes that the 2000 assessment of $109,000 should be confirmed.
C. Commission's Findings
The Commission's findings are as follows:
The issues before the Commission are whether or not the assessment under appeal is uniform in relation to other assessments and whether the assessment is at market value.
The issue of uniformity has been considered by the Commission on a number of occasions. In previous decisions (Commission Order LT93-2 and LT96-03), the Commission found that an essential feature of real property assessment is uniformity. That is, no matter what other principles are to be applied, if the assessment of the property in question is carried out in a uniform manner in relation to other assessments, the assessment will be found to be valid.
The principle of uniformity is clearly reflected in Section 28(1) of the Act:
Section 28 (1)
Subject to subsection (2), in any appeal to the Commission, the Minister shall demonstrate the uniformity of the assessment in relation to other assessments. (emphasis added)
The onus is thus placed upon the Minister to demonstrate that the assessment on appeal meets the essential principle of uniformity.
The first issue, then, is whether or not the Minister has demonstrated the uniformity of the assessment in relation to other assessments, pursuant to the provisions of Section 28 (1).
The Respondent presented information and data on the subject property (Exhibit R2) which establishes that the assessment process was carried out according to standards set out in the Real Property Records Division Assessment Manual. The Residential Inspection Form (Exhibit R3) provides a convenient summary of standards set out in the Assessment Manual. The lot and land is calculated from a basic rate of $26,000 listed in the Land Valuation Guide. Added values include a fixed value for a well, a computed value for paving (based on square footage) and an average cost for landscaping, for a total lot value of $28,800. The building is graded, with additions and improvements calculated. Depreciation and an adjustment multiplier are factored on the building, additions and improvements, to yield a total value on the building of $80,200. The combined value of the land and building is calculated as $109,000.
The Respondent also presented data on fourteen comparable properties (including the subject property) to support the contention that the subject property is assessed uniformly with other properties in the area. The average assessment to sales ratio of properties that have sold within the Southview Estates / Bell Heights area is 91.5% (Exhibit R1, page 12). The Respondent also presented data on a mixture of thirty-one residential properties (bungalows to two stories) located in the various subdivisions of West Royalty, to support the contention that the subject property is not over-assessed in terms of what it could command on the open market given the proper exposure to potential purchasers. The average assessment to sales ratio of this mixture of properties is 94.3% (Exhibit R1, page 13).
In considering the evidence and arguments presented by both parties in this case, the Commission has given full consideration to the Assessment Valuation Summary (Exhibit R1), the Real Property Records Division Working Document (Exhibit R2), including the comparables presented by the Respondent, and the application of the valuation of the subject property pursuant to the relevant factors addressed in the Assessment Manual. The Commission believes the use of both the comparables and the various valuation factors enhance the objectivity of the assessment process. The Commission is, therefore, satisfied that the Respondent has carried out the assessment of the subject property in the manner established for that process and has demonstrated uniformity of assessment in this case.
On the issue of the reasonableness of the assessment of the subject property in terms of its market value, the Commission notes the Appellant's arguments concerning the condition of the roof of the subject property. The Commission is also mindful of the Appellant's submissions concerning the various blighting factors (easement, poor condition of the adjacent park, odor from the Industrial Park and noise). The Appellant argued that these blighting factors should have been considered and should result in a further reduction of the subject property assessment value.
The Commission accepts that the Respondent's use of a mass appraisal method to establish the general level of assessment for a particular area is appropriate within the provisions of the Act. However, the Commission also believes the Respondent must be prepared, on referral, to justify an assessment on an individual basis in light of unique features or blighting factors of a particular property; and to make adjustments for those features or factors that may not have been taken into account on the initial assessment.
The Commission has heard evidence from the Respondent that the matters identified by the Appellant were considered and no further adjustments were felt to be justified as the impact of the surroundings and the blighting factors would be adequately addressed through the market. The Commission believes this has taken place.
In reviewing the testimony of the Appellant, the Commission has found that the thrust of the Appellant's arguments is that the assessment of the subject property ought not be increased where there is no increase in market value.
In response to this position, the Respondent stated during the hearing that there is generally a spread between assessed value and actual market value. To reduce this spread between 1998 and 1999, the assessment on all residential structures in the Province was increased by 2%. The Respondent contends that the use of an adjustment multiplier complies with the provisions of the Act, specifically Section 1(c), which provides:
Section 1 (c)
“assess” means to value a property for tax purposes, whether by an appraisal or by use of an adjustment multiplier; (emphasis added)
The Commission understands the Appellant's concern that his assessment has increased despite his contention that the market value of the subject property has not increased or possibly decreased.
However, since the requirement under the Act is to assess at market value, with the only qualification on that requirement being that such assessment must be uniform with other provincial assessments, the suddenness of the increase in assessment cannot be used as a basis for challenging the legality of the assessment. This principle has been previously canvassed by the Commission in the case of In the Matter of an Appeal by Sleiman Wakim (Order LT93-4) dated August 11, 1993.
Therefore, if a new assessment is valid, and in the present case the Commission finds that it is, then it suggests that the subject property may have been under assessed for some years, and one could view this as an advantage the property owner received in the past.
Overall, the Commission finds that the assessment of the subject property is not greater than market value and that the Respondent has demonstrated the uniformity of assessment for the subject property for 2000, in relation to other assessments, pursuant to Section 28 (1) of the Act.
The appeal is therefore denied.
3. Disposition
The Commission affirms the Respondent's decision to assess Provincial Property Number 640441 at $109,000.
A decision will so be ordered denying this appeal.
Order
WHEREAS Iris Jamieson has appealed a decision by the Provincial Treasurer pertaining to the 2000 assessment of the Provincial Property Number 640441;
AND WHEREAS the Commission heard the appeal at a public hearing conducted in Charlottetown on September 28, 2000;
AND WHEREAS the Commission has issued its findings in this matter in accordance with the Reasons for Order issued with this Order;
NOW THEREFORE, pursuant to the Island Regulatory and Appeals Commission Act and the Real Property Assessment Act,
IT IS ORDERED THAT
1. The appeal is denied.
DATED at Charlottetown, Prince Edward Island, this 5th day of October, 2000.
BY THE COMMISSION:
Ginger Breedon, Vice-Chair
Norman Gallant, Commissioner
Arthur Hudson, Commissioner
NOTICE
Section 12 of the Island Regulatory and Appeals Commission Act reads as follows:
Parties to this proceeding seeking a review of the Commission's decision or order in this matter may do so by filing with the Commission, at the earliest date, a written Request for Review, which clearly states the reasons for the review and the nature of the relief sought.
Sections 13.(1) and 13(2) of the Act provide as follows:
(2) The appeal shall be made by filing a notice of appeal in the Supreme Court within twenty days after the decision or order appealed from and the Civil Procedure Rules respecting appeals apply with the necessary changes.