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Docket LT11001
Order LT15-01

IN THE MATTER of an appeal by The Raymond Group Ltd. and others of a decision of the Minister of Finance, Energy and Municipal Affairs regarding the 2010 assessment of Provincial Property Numbers 1010552, 1010537, 1010560 and 1010545 located in Rocky Point.

BEFORE THE COMMISSION

on Friday, the 18th day of September, 2015.

J. Scott MacKenzie, Q.C., Chair
Michael Campbell, Commissioner
Jean Tingley, Commissioner

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Order

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Contents

Written Submissions

Reasons for Order

1.    Introduction

2.    Discussion & Findings

3.    Disposition

Order

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Written Submissions

1.    Written Submissions filed on behalf of the Appellants by:

Chris Nicholson

2.    Written Submissions filed on behalf of the Respondent Minister of Finance, Energy and Municipal Affairs by:

Boyce Costello

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Reasons for Order

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1.  Introduction

[1]  This is an appeal under the Real Property Assessment Act, R.S.P.E.I. 1988, Cap. R-4 (the Act), by The Raymond Group Ltd. for parcel number 1010537, Melissa Jean Raymond, Freda Raymond, Janis Raymond and Cathy MacNutt for parcel number 1010552, John Christopher Nicholson for parcel number 1010560 and Melissa Jean Raymond for parcel number 1010545 (hereinafter referred to as the Appellants and the subject parcels). The appeal pertains to a decision of the Respondent Minister of Finance, Energy and Municipal Affairs (the Respondent) with respect to the 2010 assessment of the subject parcels, all of which are located at Nicholson Pass Road in Rocky Point. 

[2]  On January 13, 2011, the Commission received a Notice of Appeal signed by M.J. Raymond on behalf of the Appellants.  The Notice of Appeal stated the following reasons for the appeal:  

Limited access, no services i.e. water / septic, No Power lines

[3]  On March 1, 2011, the Commission received an Assessment Valuation Summary (AVS) filed on behalf of the Respondent.  Commission staff provided a copy of the AVS to the Appellants' representative.  

[4]  The Appellants requested numerous extensions of time in order to discuss a resolution with the Respondent.  These extensions were granted by the Commission.  Ultimately, in an effort to move matters forward, the Commission advised the parties on December 31, 2013 that the matter would be heard on May 1, 2014.  In April 2014, the parties agreed to proceed by way of written submissions.  Written submissions were received from the parties in June 2014.  At the request of the Commission, a further written response was received from the Respondents in October 2014 and a written rebuttal was received from the Appellants in November 2014.

2.  Discussion & Findings

Appellants' Position Summary

[5]  In their written submissions, the Appellants submitted that the assessment of $82,500 for each of the four subject parcels was excessive and the assessment for each parcel ought to be reduced to a sum not exceeding $70,000.  The Appellants expressed concern that the assessment process was "arbitrary" noting fluctuations in assessment since 2007 and a doubling of the assessment from 2009 to 2010.  The Appellants also submitted that the comparable properties used by the Respondent were not in fact comparable or were not located in the proximate area.   

Respondent's Position Summary 

[6]  The Respondent presented a lengthy analysis in the 2011 AVS.  The Respondent requested that the assessment of $82,500 for each of the four parcels be confirmed on appeal.   

[7]  In the Respondent's final submission of October 2014, it was noted in part that  

...there is no impairment to access or electricity related to the subject properties.  

The department completed an extensive revaluation of all water influenced properties across PEI. No adjustment support was noted regarding variation in access. 

The Commission's Findings 

[8]  After giving careful and full consideration to the evidence presented in this appeal, and upon a review of the applicable law, it is the decision of the Commission to allow the appeal and reduce the assessment of each of the four subject parcels from $82,500 to $75,000 for the 2010 property tax year for the reasons that follow. 

[9]  Subsection 22(1) of the Act sets out the jurisdictional scope of a property tax assessment appeal to the Commission: 

22.(1) Where an assessment has been referred to the Minister under section 20, and after the Minister has notified the person making the reference of his decision, the person making the reference may appeal to the Commission to have the assessment vacated or varied.

[10]  Subsection 3(2) of the Act reads as follows: 

3(2) All real property owned by the Crown or any person shall be assessed at its market value, either  

(a) as commercial realty; or

(b) as non-commercial realty.

[11] Market value is defined in the Act as: 

1.1 (f) "market value" means, in respect of real property, the most probable sale price of that real property as indicated by consideration of the cost of reproduction, the sale price of comparable properties and the value indicated by rentals or anticipated net income;

[12]  Subsection 28(1) states: 

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. 

[13]  In the Respondent's AVS, the following assessment history for each of the four lots was noted: 

2007 Market Value $82,000 

2008 Market Value $30,000 [reflects a variance as a result of a referral decision made by the Respondent – this referral decision advised that "your assessment has been reviewed and reference remarks considered.  The varied assessment is recommended to reflect uniformity to other existing lots in this area.  Those properties are currently under review and once revised lot values are implemented, the same will apply to this property."] 

2009 Market Value $40,300 

2010 Market Value $82,500 

[14]  In the Comparable Assessment Analysis contained in the Respondent's AVS, five comparable properties were considered along with the subject parcels.  The Respondent's assessment analysis noted: 

The base value assessment for water front lots within the subject's market area is $75,000.  Base value assessments are adjusted when properties exhibit distinguishing features and/or characteristics.  The subject property and comparable #1 have been adjusted from the base value for lot size. 

The assessment comparables are located within the subject area and are considered to have similar characteristics to the subject property.  The comparables' 2010 assessment range from $75,000 to $78,000 shows the subject property as being uniformly assessed with other similar properties. 

[15] In the Comparable Sales Analysis contained in the Respondent's AVS, five comparable properties that sold in the 2009 to 2010 period yielded selling prices for unimproved land varying from $110,000 to $130,000 with the mean ratio being $119,000.  The conclusion drawn in the Respondent's sales analysis was that the subject parcels were not considered to be assessed in excess of the market value. 

[16]  The Commission notes that the Appellants advised that the four parcels had been appraised as one undivided parcel valued at $280,000 in 2007.  Following the 2007 appraisal, the property had been subdivided into the presently existing parcels and a clay access road across the top portion of the subject parcels was built.  The Commission is of the view that some increase in valuation from 2007 to 2010 is warranted given the subdivision of the property and the access road built by the Appellants. 

[17]  However, the clay roadway leading to the Appellants' access road is a very long and narrow private right of way in a poor state of repair.  There is no electrical service leading to the subject parcels.  The right of way leading to the Appellants' access road is too narrow to allow electrical service to be placed alongside the right of way.  In order to obtain electrical service the Appellants would need to negotiate access from adjacent landowners.  Such electrical service access could be very costly for the Appellants to obtain.   

[18]  While the subject parcels are somewhat larger in acreage than the assessment comparable properties, the Commission finds that this is offset by road and electricity access issues for the subject parcels that appear to be much more problematic in comparison to other lots in the area.  Accordingly, the Commission finds that a 2010 assessment of $75,000 for each of the four subject parcels, reflecting the base value assessment for waterfront lots in the market area, is appropriate. 

3.  Disposition

[19] An Order will therefore be issued allowing the appeal and directing the Respondent to vary the 2010 assessment to $75,000 for each of the four subject parcels, namely property numbers 1010552, 1010537, 1010560 and 1010545.

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