Docket LT96010
Order LT97-02

IN THE MATTER of an appeal by Paul J. Maynard against the 1996 assessment by the Provincial Treasurer pertaining to Provincial Property Number 26161. 

BEFORE THE COMMISSION

on Friday, the 10th day of October, 1997.

Ginger Breedon, Vice-Chair
Debbie MacLellan, Commissioner
Carl Riggs, Commissioner

Order

Contents

Appearances & Witnesses

Reasons for Order

1. Introduction

2. Discussion

3. Decision

4. Disposition

Order

Appearances & Witnesses

1. For the Appellant

Witnesses:

Paul J. Maynard
Charlotte Maynard

2. For the Provincial Treasurer

Witness:

Kevin Dingwell

Reasons for Order

1. Introduction

This is an appeal under Section 22.(1) of the Real Property Assessment Act, R.S.P.E.I. 1988, Cap. R-4, by Paul J. Maynard (the Appellant) against a decision of the Provincial Treasurer (the Respondent) with respect to the 1996 assessment of Provincial Property Number 26161 located in Birch Hill.

According to the Respondent's submission the area is a rural district comprised mainly of rural agricultural and residential properties. The subject property is approximately 3.1 acres with 429 feet of frontage along Provincial Highway Route 132. The subject property is a treed lot surrounded by both improved residential properties and both clear and wooded lands.

The assessment history of the property is as follows:
YEAR

           ASSESSMENT
1992 $200
1993 $200
1994 $200
1995 $200
1996 $3,200

By Notice of Appeal dated October 3, 1996 the Appellant appealed the 1996 assessment of the subject property to the Island Regulatory and Appeals Commission (the Commission). The assessment value under appeal is $3,200.

The Commission heard the appeal on October 8, 1997.

2. Discussion

The Appellant's position may be summarized as follows:

From the Notice of Appeal, the Appellant provides the following reasons for appealing the 1996 assessment:

This assessment is 16 times higher than last year (from $200 to $3200). It is a woodlot, has always been a woodlot, and is only used as a woodlot. Should I build or sell, then tax accordingly. I can accept a fair increase but not a gross and unfair jump such as this.

During the hearing the Appellant stated that he inherited the property from the estate of his father in 1987. A number of years after inheriting the property he sold a large portion of the land while retaining a small parcel - being the subject property. The Appellant states that it was his intention to retain the subject parcel for the purpose of harvesting wood and not for residential purposes .

In a letter to the Commission, submitted during the hearing (Exhibit A3) the Appellant states that he believes that "… the government is overly unfair with it's land taxation policies when it decides to increase a piece of property 16 fold when that land has never been sold for over 40 to 100 years and in the same family. It is not so much the $3200 assessment, although proper for a building lot not a woodlot, it is the percentage of increase over one year that I oppose. Once again, this is a woodlot, has always been a woodlot and will continue to be a woodlot should this Commission deem it so."

The Respondent's position may be summarized as follows:

According to Exhibit D2, the Respondent submits that during the period between 1991-1992 the main farm was subdivided and the original parcel number was assigned to the subject property. At the time of subdivision, the original values assigned to the total acreage were also divided and reassigned to the original parcel and the new parcel. The assessed value of $200 was applied to the remaining portion under property number 26161 as 3.1 acres of woodland valued at $70 per acre or $200 rounded. The Respondent also stated that the assessment on the parcel at this time was a mistake and the assessment on parcel 26161 should have been as an unimproved building lot, as it is now assessed.

In 1995 a reappraisal of properties was conducted in the Birch Hill district - the subject property was included in this process. At this time, the highest and best use of this property and the surrounding similar properties was considered and the lot was assessed as an unimproved residential lot with a value of $3,000 plus the excess land at woodland rates for a total assessment of $3,200.

In response to the Appellant's question as to what constitutes an unimproved building lot and how is this distinguished from a woodlot, the Respondent stated that when a woodlot is subdivided from a larger parcel and has road frontage, the highest and best use for the parcel is determined to be as a building lot and therefore it would be assessed as such.

According to the Respondent's submission the highest and best use may be defined as:

that use which, at the time of appraisal, is most likely to produce the greatest net return, in money or amenities, over a given period of time. (Real Estate Appraising in Canada 3rd Edition.)

The Respondent contends that $3,000 is the base residential lot value applied from the Land Value Guide for district number 1003 – Birch Hill.

The Respondent argues that the subject property is assessed uniformly to other lots in this area and requests the Commission to confirm this decision.

3. Decision

In deciding this matter the Commission focused on two primary issues which include: A) the lot valuation; and B) the increase in the property assessment.

A.    Lot Valuation

Pursuant to the provision of Section 28.(1) of the Act, in any appeal to the Commission, the Minister shall demonstrate the uniformity of the assessment in relation to other assessments.

During the hearing the Respondent took great effort to explain how the assessment of the lot was derived and why the Appellant's lot was assessed as a residential lot and not a woodlot.

The Respondent states that when the original farm property was divided and the large portion of the land was sold, the Appellants retained a 3.1 acre parcel located along the Route 132. When the Birch Hill district was reappraised in 1995 the subject property was reviewed, as were all other properties in the study district. During this reappraisal process the Respondent determined that property should be assessed as a residential lot.

According to the Respondent, the rational for this decision was based on the the determination that the "highest and best use" of the subject property was as a residential lot. This determination was made independent as to whether the owner of the property intends to develop the lot or sell the lot for residential purposes.

The Respondent submits that this is the standard methodology when assessing lots of this nature.

In calculating the assessed value of the property, the Respondent determined that .6 acres of the property should be assessed as a residential lot and according to the Land Valuation Guide (excerpt contained in Exhibit D2 at page Ex. A) the value of residential lots in this district is $3,000. The remaining acreage was assessed as woodland at a value of $70 per acre for a value of $200 total.

The Respondent has presented a list of properties to support that this methodology for land valuation is uniform and applied consistently.

Although the Appellant disagrees with the assessed value of the property, he has not presented any substantive evidence to support that the Respondent's methodology is wrong or that the assessment is not uniform in relation to other assessments.

In reviewing the calculations, methodology and Land Valuation Guide relied upon by the Respondent, the Commission finds this approach is valid and appropriate to determine market value.

The Commission therefore affirms the assessed value of $3,200 for property number 26161.

B.    The Increase In The Property Assessment

On the issue involving the magnitude of the increase in the assessed value of the property, the Appellant raised this issue in both his Notice of Appeal and in his submission during the hearing - and questioned the increase in property assessment from the 1995 level of $200 to the 1996 level on $3,200.

This issue was addressed by the Commission in the case of In the Matter of an Appeal by Sleiman Wakim (Order LT93-4) dated August 11, 1993 and in a case of In the Matter of an Appeal by Douglas and Margaret Fitzpatrick (LT94-08) dated December 19, 1994. In these cases the Commission agreed with the Appellants that the sudden increase in assessment was shocking. In the Wakim case the increase was approximately 52% while in the Fitzpatrick case it was approximately 75%. However, since the requirement under the Real Property Assessment Act is to assess at market value, and such value must be uniform with other provincial assessments, the suddenness of the increase cannot be used as a basis for challenging the legality of the assessment.

The Commission finds that the Act and Regulations do not require assessment changes to be made gradually, consequently the suddenness of the change cannot be used to invalidate the assessment.

In this case, as the new assessment is valid, one can draw the conclusion that the property in question was undervalued for some years and one could view this as an advantage the Appellant received in the past.

Therefore the appeal will not be allowed on this issue.

4. Disposition

The Commission affirms the Department's decision to assess Provincial Property Number 26161 at $3,200.

A decision will so be ordered denying this appeal.

IN THE MATTER of an appeal by Paul J. Maynard against the 1996 assessment by the Provincial Treasurer pertaining to Provincial Property Number 26161.

Order

WHEREAS Paul J. Maynard has appealed a decision by the Provincial Treasurer pertaining to the 1996 assessment of Provincial Property Number 26161;

AND WHEREAS the Commission heard the appeal at a public hearing conducted in Charlottetown on October 8, 1997;

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 10th day of October, 1997.

BY THE COMMISSION:

Ginger Breedon, Vice-Chair

Debbie MacLellan, Commissioner

Carl Riggs, 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.