Docket: LT93004
Order: LT94-05IN THE MATTER of the Real Property Assessment Act, R.S.P.E.I. 1988 Cap. R-4;
and
IN THE MATTER of an appeal to The Island Regulatory and Appeals Commission (the Commission), under Section 22 of the Real Property Assessment Act (Act), by Susan Goehring (the Appellant) of Charlottetown, Prince Edward Island, against a decision of the Minister of Finance (the Minister) with respect to the 1992 assessment of residential property (Provincial Property Number 534180-000) located in Stanley Bridge, P.E.I.
DATED the 9th day of June, 1994.
Linda Webber, Chairman
John L. Blakney, Vice Chairman
Debbie MacLellan, Commissioner
Interim Order
Appearances
1. For the Appellant
R.H. Wygant Representing the Appellant
2. For the Minister
Kevin Dingwell Manager, Residential and Farm Properties
Eugene Power Regional Supervisor
Reasons for Order
I. BACKGROUND
The subject property is located in the Seawood Estates Subdivision, Stanley Bridge, Prince Edward Island.
The property is an interior lot located at the intersection of Stanley Road and Dunn Avenue. The lot has not been improved and has access to a central water and disposal system, which are provided by the developer.
The assessment history of the subject property is as follows:
1981-1991 $ 5,000 annually 1992 $10,000 By Notice of Appeal dated September 8, 1992, the Appellant appealed the 1992 assessment to The Island Regulatory and Appeals Commission.
The Commission heard the appeal on October 27, 1993 in Charlottetown.
II. EVIDENCE AND ARGUMENTS
A. Appellant
As contained in the Notice of Appeal, the principal arguments for the Appellant can be summarized as follows:
The Appellant argued the property has been assessed in an arbitrary and discriminatory fashion without due regard for market value and comparable values of other property located in the district. The Appellant believes that during the past two years real estate values have "plummeted" to their lowest levels in a number of years and as a result finds it difficult to accept an increase of 100% in her property value.
The Appellant submitted that an increase of 10% was applied to an adjacent area previously owned by Seawood Estates and this appears to be the rule rather than the exception for other districts. The Appellant questioned how an increase of 100% for interior lots and 400% for shore lots can be considered uniform and comparable to other properties in the area when Seawood Estates is approved for seasonal use only.
In the assessment of the properties, a "blanket" approach was taken to maximize assessments and no consideration was given to size and location of individual lots.
The Appellant contends that the values established for assessment purposes are obviously based on Seawood's year-round services with no allowance for the fact that Seawood is zoned and approved for seasonal use; although the development may well be exclusive, this should not require that it be exclusive in the sense of bearing a tax burden several times greater than any of the member districts in the Cavendish municipality. This "exclusivity" should not be used as a method and means of increasing assessments, she argues.
B. The Minister
The principal arguments for the Minister, as presented in Exhibit 6-1, are as follows:
The increase in assessment from the 1991 value of $5,000 to the 1992 value of $10,000 was due to a review, reinspection and reappraisal of the work unit during the fall of 1991. The increase was necessary to reflect current market conditions within the work unit.
All interior lots in the work unit were assessed on a per lot basis and the sales information provided supports the assessed value of $10,000 per lot.
III. DECISION
The three primary objections to the assessment in question are: 1) the suddenness of the increase, 2) the increases for lots in Seawood Estates not being uniform with increases to other lot values in the area, and 3) the failure of the Department to take into consideration individual lot characteristics.
1) Suddenness of Increase
This issue was canvassed by the Commission in the case of In the Matter of an appeal by Sleiman Wakim (Order LT93-4) dated August 11, 1993. In that case we agreed with the Appellant that the sudden increase in assessment (52%) was shocking. However, since the requirement under the Real Property Assessment Act is to assess at market value, the only qualification on that being that such assessment must be uniform with other provincial assessments, the suddenness of the increase can't be used as a basis for challenging the legality of the assessment. If such a new assessment is valid, then it suggests that the property in question was undervalued for some years and one could view this as an advantage the Appellant received in the past.
2) Lack of Uniformity
The method used by the Department to arrive at an average lot value was to review the history of lot sales in the development in question and to determine an average value from this. The only distinction made was between shore lots and inside lots.
The Appellant argues that a comparison of only lots within the development is unfair. The benefits provided within that development have been, and continue to be, paid for by the owners and should not be used to evaluate the property, she suggests.
While in principle the Department should be careful not to limit its market value analysis too much-since this is likely to affect its ability to meet the uniformity test-in a case such as this we believe the Department's approach is reasonable.
The specific services the developer has provided directly affect the value of these parcels and to ignore them would be to ignore a factor of obvious importance in marketing these lots. We accept the Department's evidence that there are no comparable developments in the area with which to make an external comparison.
As well, the analysis of sales appears to us to be fair and the conclusions drawn are reasonable when trying to determine an average base value for lots in this development.
3) Unique Features
The Appellant argues that it is unfair and inequitable to ignore the unique characteristics of each lot.
This issue was addressed in the case of In the Matter of Robert B. Jaynes and Mildred L. Jaynes (Order LT93-2) dated August 12, 1993. In that case the assessment of the lot in question was on the basis of site acreage and its location on the shore; no adjustment was made for the amount of shore frontage, accessibility to the shore, the likelihood of erosion, etc. After reviewing the law and principles of assessment, the Commission concluded that the failure to take into account the unique features of the land resulted in an inequitable assessment.
As in that case, we reaffirm that it is acceptable for the Department to use its mass appraisal method to establish the general level of assessment for a particular area. But it must also be prepared, upon referral, to justify these on an individual basis in light of the unique features of a particular property and to make adjustments for unique features that may not have been taken into account.
Size is only one variable and clearly minor size differences are not in issue here. But the "average" value is just that, an average for an average lot, which the Department should be able to define.
In this case the Department justified its assessment by saying that "The subject lot is assessed at $10,000 which is identical to all of the comparables." (Exhibit 6-1, p.11) and by pointing out the amount for which lots are listed in the Seawood Estates brochure.
The problem with the "comparables" is that while the assessment is identical, the lots being assessed are not. Without deciding generally upon exactly what method should be used to distinguish between lots or how great a variance should trigger a variation in assessment, the Commission is of the view that one lot which is virtually twice as large as another can only be assessed at the same value if there are other offsetting characteristics that support such an assessment. In the comparables used by the Department to justify the assessment of the Appellant's property we have such a situation: Lot 57 is described as .500 acres in size and having an assessment of $10,000; the same assessment is given to Lot 196 (the Appellant's lot) which is described as .260 acres. The other 5 comparables range between these two in size (Exhibit 6-1, p.7).
This is definitely the type of situation in which the Department must review the characteristics of the Appellant's lot, compare these to the average lot from which the $10,000 average assessment base was derived, and either make adjustments reflecting the difference between the Appellant's lot and the "average", or explain why offsetting adjustments bring her lot back to the "average" value. When all factors are considered the average may still justifiably apply, but the onus is on the Department to show how such meets the uniformity test.
We therefore order the Department to undertake this review-and report back to the Commission its recommendation in light of these guidelines and the reasons for this recommendation-by July 15, 1994. At that time the Commission will issue a final Decision and Order.
IN THE MATTER of the Real Property Assessment Act, R.S.P.E.I. 1988 Cap. R-4;
and
IN THE MATTER of an appeal to The Island Regulatory and Appeals Commission (the Commission), under Section 22 of the Real Property Assessment Act (Act), by Susan Goehring (the Appellant) of Charlottetown, Prince Edward Island, against a decision of the Minister of Finance (the Minister) with respect to the 1992 assessment of property (Provincial Property Number 534180-000) located in Stanley Bridge, P.E.I.
Interim Order
WHEREAS Susan Goehring (the Appellant) appealed to The Island Regulatory and Appeals Commission (the Commission), in written notice dated September 8, 1992, against a decision of the Minister of Finance;
AND WHEREAS the Commission heard the appeal at a public hearing conducted in Charlottetown, P.E.I. on October 27, 1993;
AND WHEREAS the Commission has made a decision in accordance with the stated reasons;
NOW THEREFORE, pursuant to the Real Property Assessment Act;
IT IS ORDERED THAT the Department undertake a review of the Appellant's lot, in accordance with the guidelines set out in the Decision herein, and report back to the Commission its recommendation and the reasons for this recommendation by July 15, 1994.
DATED at Charlottetown, Prince Edward Island this 9th day of June, 1994.
BY THE COMMISSION:
Linda Webber, Chairman
John L. Blakney, Vice Chairman
Debbie MacLellan, Commissioner
