Order LT05-01 - Dockets LT05002, LT05003 and LT05006 - Real Property Appeal - Donald Claude Bergman and Shelton Adams v. Provincial Treasurer (June 13, 2005)

Docket: LT05002, LT05003 and LT05006
Order LT05-01

IN THE MATTER of appeals by Donald Claude Bergman and Shelton Adams of decisions by the Provincial Treasurer regarding the 2004 assessment of Provincial Property Numbers 518464, 524652 (Mr. Bergman) and 604025, 604033, 514828 and 663898, located in Desable.

BEFORE THE COMMISSION

on Monday, the 13th day of June, 2005.

Maurice Rodgerson, Chair
Brian J. McKenna, Vice-Chair
Weston Rose, Commissioner

Order

Contents

Appearances & Witnesses

Reasons for Order

1.    Introduction

2.    Discussion & Findings

3.    Disposition

Order

Appearances & Witnesses

1.    Written submissions filed by the Appellants

Donald Claude Bergman
Shelton Adams

2.   For the Provincial Treasurer

Paul Olscamp

3.    Member of the Public

Chris Roumbanis

Reasons for Order

1.  Introduction

[1] These are appeals filed with the Island Regulatory and Appeals Commission (hereinafter referred to as the Commission) under the Real Property Assessment Act, R.S.P.E.I. 1988, Cap. R-4 (hereinafter referred to as the Act), filed by Donald Claude Bergman (LT05002 – property number 524652 and LT05006 – property number 518464) and Shelton Adams (LT05003 – property numbers 604025, 604033, 514828 and 663898) (hereinafter referred to as the Appellants). Appeals LT05002 and LT05003 were dated December 23, 2004, mailed via registered mail and received on January 4, 2005. Appeal LT05006 was dated January 14, 2005 and received via regular mail on January 25, 2005.

[2] The Appellants seek a reduction in the 2004 assessment for each parcel under appeal and further request that the percentage reduction become retroactive for all tax years since purchase by the Appellants.

2.  Discussion & Findings

[3]   The positions that follow represent a brief summary of the written submissions filed with the Commission and the oral testimony heard before the Commission as such submissions and testimony relate to the assessed value of these parcels under appeal.

Appellants' Position

[4]   The Appellants filed several comprehensive written submissions in support of their position and explained that they would not be present at the hearing given the cost of travel from their homes in British Columbia. In their submissions, the Appellants indicated that their properties, located in what is known as the Genge Subdivision, do not have lawful road access and that this lack of access is a result of errors or omissions in the planning approval process dating back to the 1973 subdivision approval. The Appellants contend that because they lack lawful access to their properties these properties cannot be developed and thus have no value. The Appellants therefore seek a retroactive reduction in the assessed value of all properties for which these appeals have been filed.

Respondent's Position

[5]   The Respondent filed an Assessment Valuation Summary and a Sales Valuation Summary for the parcels under appeal owned by each Appellant. The Respondent submits that the lot values are uniform and consistent with other similar lots and the assessed values have been adjusted to take into account the present inability to obtain a building permit for each lot. The Respondent notes that a lot in the subdivision had been purchased at a tax sale for $4000 and submits that this figure represents an appropriate present value with an expectation of a greater future value. The Respondent submits that section 32 of the Act limits the retroactive effect of the Commission's decision and the Respondent requests that the 2004 assessed values for these parcels be confirmed.

Member of the Public

[6]   Chris Roumbanis informed the Commission that he is a real estate agent who represents Tri-County Agencies which owns 14 lots in the subdivision. Mr. Roumbanis provided the Commission with an oral background summary of the history of the Genge Subdivision. He stated that most of the owners were not aware of the access issue until the matter came to light in 2000 or so. He submits that these parcels cannot be assessed as the conditions for approval have still not been met. He states that these parcels effectively amount to "tent sites" without a legal right of way.

The Commissions Findings

[7]   After giving careful and full consideration to the evidence presented in this case, and upon a review of the applicable law, it is the decision of the Commission to allow the appeals and reduce the assessment for each lot under appeal to a nominal value of $1000 per lot. The reasons for the Commissions decisions follow.

[8]   Sections 20 through 34 of the Act deal with the right of a taxpayer to appeal a real property tax assessment. The Act effectively provides two levels of appeal. First there is an internal appeal, termed as a "referral", which is filed by the taxpayer with the Minister (Provincial Treasurer) following receipt of a notice of assessment. Under the referral process the Provincial Treasurer reconsiders the assessment and provides a decision to the taxpayer. At the end of the referral process the taxpayer has the right, pursuant to the requirements of section 22, to file an appeal with the Commission to have the assessment vacated or varied.

[9]   While the Appellants have provided the Commission with extensive written submissions on the legal access issue, it is important to emphasize that in an appeal under the Act such information is relevant solely for the purpose of establishing the assessment for the parcels under appeal. The Commission does not have the jurisdiction under the Act to address the legal access issue per se.

[10]   Assessments under the Act are to be determined on the basis of "market value" which is defined under paragraph 1.(f) as:

1.(f)    "market value" means the most probable sale price indicated by consideration of the cost of reproduction, the sale price of comparable properties and the value indicated by rentals or anticipated net income;

[11]   The Commission notes that the Respondent acknowledges that the access issue affects the assessment valuation for these parcels and the Respondent has reduced the assessed value of each parcel accordingly.

[12]   The Commission finds that all land has value. However, when residential building lots cannot be developed because lawful access required by development legislation is lacking, then the current value of such land is only nominal. While the present value of the land may be considered by some to be much higher if one considers that in future the access issue may be rectified, the Commission is concerned with the present value for assessment purposes given the limitations which go with the land. Assessment value should not be based on speculation value, especially where the basis for determining such a valuation rests on the selling price realized for a single parcel sold at a tax sale.

[13]   Accordingly, the Commission varies the assessment of each of the six parcels subject to this appeal to the nominal assessed value of $1000 per parcel.

[14]   With respect to the issue of retroactivity, section 32 of the Act reads as follows:

32. A decision of the Commission has effect from January 1 in the year for which the assessment appealed from was made, and any changes required to be made by the Minister as a consequence of the decision shall be made by the Minister within thirty days after the Commission has made its decision. R.S.P.E.I. 1974, Cap. R-5,s.30; 1991,c.18,s.22 {eff.} Nov. 4/91.

[15]   The assessment appealed from is the 2004 assessment and pursuant to section 32 of the Act cited above, the Commission's decision is effective as of January 1, 2004. The Commission, as a creation of statute, is bound by statute and the Act makes the effective date of the Commission's decision clear. The Commission does not have the jurisdiction to award retroactivity earlier than this date.
[16]   The Commission cautions the Appellants that the assessed value of each parcel will in all likelihood increase very dramatically and suddenly upon a resolution of the access issue.

3. Disposition

[17] An Order allowing these appeals and varying the assessment of parcels 518464, 524652, 604025, 604033, 514828 and 663898 to the nominal value of $1000 per parcel effective January 1, 2004 will therefore issue.

Order

WHEREAS the Appellants Donald Claude Bergman and Shelton Adams have appealed decisions by the Provincial Treasurer regarding the assessment of parcels 518464, 524652, 604025, 604033, 514828 and 663898 located in Desable;

AND WHEREAS the Commission heard these appeals at a public hearing conducted in Charlottetown on April 29, 2005;

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 allowed.

2. The assessment of parcels 518464, 524652, 604025, 604033, 514828 and 663898 is hereby varied to the nominal value of $1000 per parcel effective January 1, 2004.

DATED at Charlottetown, Prince Edward Island, this 13th day of June, 2005.

BY THE COMMISSION:

Maurice Rodgerson, Chair

Brian J. McKenna, Vice-Chair

Weston Rose, Commissioner

NOTICE

Section 12 of the Island Regulatory and Appeals Commission Act reads as follows:

12. The Commission may, in its absolute discretion, review, rescind or vary any order or decision made by it or rehear any application before deciding it.

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 33 and 34 of the Real Property Assessment Act provide as follows:

33. Notwithstanding anything in any public or private Act, an appeal lies to the Supreme Court of the province from any order, decision, or award of the Commission, if notice of the appeal is given the other parties within forty-five days after the making of the order, or decisions sought to be appealed from.

34. The rules and practices of the Supreme Court respecting appeals apply with the necessary changes to any appeal.