Order LT95-01 - LT93028 - Property Appeal - Jerold MacLean v. Minister of Finance (Mar 1, 1995)

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 Jerrold MacLean (the Appellant) of Charlottetown, Prince Edward Island, against a decision of the Minister of Finance (the Minister) with respect to the 1993 assessment of residential property (Provincial Property Number 352294) located in Charlottetown, P.E.I.

Linda Webber, Chairman
Myrtle Jenkins-Smith, Commissioner
James Nicholson, Commissioner

Appearances

I. BACKGROUND

The municipal address of the subject property is 31 Edinburgh Drive, Charlottetown, Prince Edward Island.

The subject property is situated on the south side of Edinburgh Drive and contains 0.14 acres. The lot measures 80 feet on Edinburgh Drive and has a depth of 75.98 feet with an area of 6,078 sq. ft.

The lot is improved with a 1 3/4 storey residence with attached garage and patio. The house is relatively new and of standard construction.

The interior of the structure is finished, wired and insulated for electric heat and has modern plumbing.

1992

1993

$32,900

$37,500

$145,200 Revised - new construction 01/06/93

By Notice of Appeal dated January 17, 1994, the Appellant appealed the 1993 assessment to The Island Regulatory and Appeals Commission.

The Commission received an additional submission from the Department on October 21, 1994 and written response from the Appellant on November 18, 1994.

II. EVIDENCE AND ARGUMENTS

A. Appellant

The principal arguments for the Appellant are set out in the Notice of Appeal and are summarized as follows:

The Appellant contends the Department has erred as the assessment of the lot is excessively high in relation to his previous property located at 100 Nassau Street.

B. The Minister

The principal arguments for the Minister are set out in Exhibit 1 and are summarized as follows:

The Department contends the subject property is assessed uniformly to all other lots in the area. The methodology used to assess the property is based on applying a front foot value with allowances for depth and a discount factor for location, applied according to the Real Property Assessment Manual.

In calculating lot value, all front foot values in this work unit are based on a standard frontage of 80 feet.

In determining the location factor, the Department assigns discount factors to properties located in Charlottetown, based on the property's location relative to the water - the discount factor is increased as the location relative to the water is increased. The base value as prescribed by the Land Valuation Guide for 1993 is $800 per front foot. The subject property is located in the "third tier" and a 30% discount factor is applied to properties in this tier.

The standard depth for lots is 100 feet. As the subject property has a depth of 75.98 feet, a depth factor of .88 is applied. The depth factor has been applied in compliance with the depth factors prescribed by the Real Property Assessment Manual.

Front foot		Base		Location		Depth		Paving & Landscaping
80	*	$800	*	.70	*	.88	+	$1800	=$41,200

In determining the value of the structure the Department applied the 1979 base cost per square foot to the area of the structure. This value is then adjusted for the various forms of depreciation and an adjustment multiplier is applied to determine the assessed value. The structure is valued at $104,000.

The Department argues that sales information on comparable properties supports that the subject property is not over-assessed in terms of what it could command on the open market. The home is new, is meticulously cared for and is located in a desirable neighborhood.

The lot was purchased in October 1992 for $32,000 and a permit was issued for $120,000. The property sold for $165,877 in July 1993.

III. DECISION

Having considered the evidence presented during the hearing the Commission decided to deny the appeal. The reasons for this decision are as follows:

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.

The focus of the Appellant's appeal was related to the assessed value of the lot and his contention that the lot was over assessed in relation to his previous property located at 100 Nassau Street. In addition, the Appellant objects to the large increase in the value of the property within a two year period.

During the hearing the Department took great effort to explain how the assessment of the lot was derived and why the Appellant's previous lot at 100 Nassau Street had less value.

The Department stated that valuation of the lot was derived by applying a location factor, front foot value and depth factor and argues this is a standard approach for the valuation of lots in Charlottetown.

The location factor was derived by applying a discount factor to the subject lot based on the property's location relative to the waterfront. As the base value for 1993 is $800, the Commission understands the subject property is located in the third tier and is discounted by 30% which results in a front foot value of $560. The Commission finds the principle of stratifying properties based on similar or like characteristics an acceptable methodology to determine market value.

In calculating the depth factor, the Department applies a factor of .88 which the Commission finds to be consistent with the Depth Scale factors contained in the Real Property Assessment Manual. Value is then added for paving and landscaping, again consistent with the Real Property Assessment Manual.

The Appellant argues that his previous property was closer to such amenities as schools, the university and shopping malls and therefore should be more valuable. On this matter, the Commission agrees that certain factors influence market value including those presented by the Appellant, however in this case, the Department has argued that the property's location relative to the waterfront is the predominant factor influencing market value in the study area. The Department has presented a list of properties to support that this methodology for land valuation is uniform and applied consistently. The Appellant has not presented any evidence contrary to this.

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

As for the Appellant's concern with the 22.5% increase in property value over a two year period, 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 property owner received in the past.

Overall the Commission finds that the assessment is not too high and that the Minister has demonstrated the uniformity of assessment in relation to other assessments, pursuant to Section 28.(1) of the Act.

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 Jerrold MacLean (the Appellant) of Charlottetown, Prince Edward Island, against a decision of the Minister of Finance (the Minister) with respect to the 1993 assessment of residential property (Provincial Property Number 352294) located in Charlottetown, P.E.I.

WHEREAS Jerrold MacLean (the Appellant) appealed to The Island Regulatory and Appeals Commission (the Commission, in written notice dated January 17, 1994, 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 14, 1994;

AND WHEREAS the Commission made a decision in accordance with the stated reasons;