Docket LT96006
Order LT96-03IN THE MATTER of an appeal by Daniel and Sandra Woodin against a decision by the Provincial Treasurer with respect to the 1995 assessment of Provincial Property Number 730408, located in Summerside, P.E.I.
BEFORE THE COMMISSION
on Friday, the 18th day of October, 1996.
John L. Blakney, Vice-Chair
Anne McPhee, Commissioner
Order
Contents
Appearances & Witnesses
Reasons for Order
1. Introduction
2. Discussion & Findings
3. Findings
Order
Appearances & Witnesses
1. For The Appellants
Witness:
Dan Woodin2. For The Minister
Witnesses:
Kevin Dingwell, Manager, Residential and Farm Properties
Paul Olscamp, Supervisor, Prince County
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 Daniel and Sandra Woodin (the Appellants) against a decision by the Provincial Treasurer (the Minister) with respect to the 1995 assessment of Provincial Property Number 730408.
The municipal address of the subject property is 254 Walker Street, Summerside, P.E.I. The property is located in the residential subdivision known as Blue Bell. According to the Minister's submission, the property consists of .22 acres and is improved with a 1204 square foot (ground floor area), 2 story residence (Exhibit D1).
The assessment history of the property is as follows:
1992 $118,300 1993 $130,000 1994 $139,000 1994 Revised $124,400 1995 $135,600 The Island Regulatory and Appeals Commission (the Commission) received a Notice of Appeal from the Appellant on April 17, 1996 in connection with the 1995 assessment of the subject property (Exhibit A1). The assessment value under appeal is $135,600.
The Commission heard the appeal on September 25, 1996 in Charlottetown.
Prior to the Commission deciding this matter, Commissioner Emmett Kelly excused himself from the panel.
2. Discussion & Findings
A. The Appellants
The arguments for the Appellants may be summarized as follows:
Based on the Notice of Appeal and arguments presented during the hearing, the Appellants take the position that the assessment of the subject property is not uniform in relation to other comparable properties.
The Appellants believe that the objective of the legislation is to assess properties at market value or the most probable sale price and the best indicator of market value is the sale price. In this case the Appellants submitted that they purchased their residence in 1994 at a price of $140,000 and accept the range of $135,000 - $140,000 as the best indicator of market value for their residence for tax assessment purposes (Exhibit A2).
Although the Appellants agreed that the value of their residence would be in the range of $135,000 to $140,000, they contend that the assessment of their property is unfair in relation to comparable properties and therefore not uniform with other assessments. The basis of their argument is that "equity from a taxation point of view implies that the burden of taxation be borne fairly among all those subject to the tax, and for property tax assessment purposes implies that properties with a comparable market value be valued similarly for property tax purposes" (Exhibit A1).
In keeping with their argument that the best indicator of market value or probable sales price is actual sales data, the Appellants presented an analysis of a sample of five (5) comparable properties to support their contention that the 1995 assessment is not uniform to other assessments (Exhibit A2). Their analysis is presented in Schedule 1.
The Appellants' analysis of actual sales price to the assessed value of the sampled units indicates the average assessment to sales ratio is approximately 87%. The Appellants used this analysis to support their contention that the property tax assessments of comparable properties are significantly below market value. The Minister assessed their property at $135,600 or approximately 97% of the sale price. The Appellants therefore submitted that because they are assessed at 97% of the sale price and not more in line with the sample of comparables used in their analysis, they concluded that their assessment is not uniform and they, therefore, bear an unfair tax burden.
The Appellants requested the Commission allow the appeal and adjust the assessed value of the unit to $120,000 to $125,000.
B. The Minister
The arguments for the Minister may be summarized as follows:
The Minister submitted that the subject property has been assessed using a standard approach in accordance with the provisions of the Act. According to the Minister's submission, identified as Exhibit D1, the 1995 assessment was derived using the Cost Approach with market factor adjustments which provides a uniform level of assessment for all properties.
The Minister presented an analysis of comparable properties to support that the subject property is not over assessed, in comparison to other similar residential units (Exhibit D1). The Minister also presented a list of comparable land assessments to support that the subject lot is assessed uniformly in relation to other lots in this area (Exhibit D1).
During the hearing the Minister submitted an analysis of the assessment to sales ratio of 14 properties in this area that sold since 1990 (Exhibits D4 and D5) - the average assessment to sales ratio for these properties is approximately 98%. This ratio, according to the Minister demonstrates that the assessment of the subject property (97%) is uniform in relation to other assessments.
The Minister submitted that the Commission should affirm the 1995 assessment at $135,600.
3. Findings
The Commission has given full consideration to the evidence submitted by both parties and has decided to deny this appeal. The reasons for this decision are as follows:
The primary issue before the Commission is whether or not the assessment under appeal is uniform in relation to other comparable assessments.
The issue of uniformity has been canvassed before the Commission on a number of occasions. In a previous decision (Commission Order LT93-2) pertaining to the issue of uniformity, the Commission found that the focus of the equitable distribution of property taxes appears to be the rationale behind numerous court decisions which emphasize, over and over again, that the most important feature of real property assessment is uniformity.1 That is, no matter what other principles are to be applied, if the end result cannot be said to assess Property A at an equivalent level to all other similar/comparable properties, then the assessment will be found to be invalid.
The importance of the principle of uniformity is evident in this province's legislation:
Section 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.(emphasis added)
This places the onus upon the Minister to demonstrate that the assessment on appeal meets the test of uniformity.
The issue here, then, is whether or not the Minister has demonstrated the uniformity of the assessment in relation to other assessments, pursuant to the provisions of Section 28.(1).
The Appellants presented an analysis of five comparable properties and contend that based on the average assessment to sales ratio which is approximately 86.8%, their property which has a ratio of 97% is over assessed.
During the hearing, the Minister presented data on 14 properties to support the contention that the assessment to sales ratio of the subject property is not over assessed and is similar to the average assessment to sales ratio of properties that have sold within this subdivision since 1990. It is important to note that the properties presented by the Minister included the properties presented by the Appellants, except for the property located at 100 Victoria Lane which is not in the Blue Bell Subdivision (which contains the subject property).
In reviewing the Minister's submission, the Appellants argued that the assessment to sales ratio of these comparables ranges from 81.63% to 129.13% which, in their opinion, supports their contention that the assessment to sales ratio of the comparables is not uniform and therefore the Minister has not satisfied the test of uniformity, pursuant to Section 28.(1). The Appellants also argued that the intent of the legislation is to have the Minister demonstrate uniformity in relation to other assessments which should include a much broader sampling - such as all of Summerside or the entire province. In addition, the Appellants suggested that the Minister's data is skewed and that the 1990 sales data and the data representing highest and lowest ratios should be removed to provide a more accurate average ratio.
In response, the Minister submitted that the data represents all properties which have sold in the immediate area since 1990. The Minister argued that based on the assessment cycle combined with other factors such as not being able to access properties at the time of assessment, it is unreasonable to have all assessments at 100% of market value using the mass appraisal method. As to the Appellant's contention that uniformity was not achieved, the Minister indicated that although the motivational factors influencing each sale are unknown, the data supports the argument that the 1995 assessment of the subject property is uniform in relation to other assessments.
Based on the information presented by both the Appellants and the Minister, the Commission has reviewed the assessment and sales information for houses sold in the Blue Bell Subdivision and finds the average assessment to sales ratio is approximately 97.3%. Even if the property located at 100 Victoria Lane were included in the analysis, the Commission finds that the assessment to sales ratio average would be 96.3%. Schedule 2 presents the properties as presented by the Minister.
In considering the data and arguments presented by both parties, the Commission understands that pursuant to Section 10.(2) of the Act, all real property shall be appraised at least once in every ten years. The Commission believes that it is reasonable to accept the premise that in the mass appraisal process, appraised values do not always equal the sale price, however, over-appraisals should balance under-appraisals, so that the typical ratio is near 100 percent.2 In conducting ratio studies the Commission also understands that it is necessary to stratify properties into relatively homogeneous groups based on such factors as use, physical characteristics or location.
In this case, the Commission has given full consideration to the comparables presented by the Appellants and those submitted by the Minister. The Commission believes the data presented by the Minister, which includes units within a similar price range and within the same subdivision, provides a representative sample that meets the criteria for a homogeneous group and establishes a ratio suitable for comparison purposes. After careful consideration, the Commission accepts the findings of the Minister that a reasonable average assessment to sales ratio to be used in this case is approximately 97%. Therefore, when the Commission compares the actual ratio of 97.3% to that of the subject property at 96.8%, there is not a substantive enough difference to find that the Minister is wrong and therefore did not demonstrate uniformity.
The Appellants stated during the hearing that their ability to obtain and analyze information was hindered by the confidentiality of the information. Without this information the Appellants have limited information with which to make an appropriate analysis. The Commission finds that Section 14 of the Real Property Assessment Act Regulations limits the communication of individual selling prices, obtained from affidavits, to selected parties and does not include the general public which include appellants. The Commission, as is the Minister, is aware of this situation and understands the limitation it places on an appellant to obtain information for purposes of analyses. However, the Commission can only apply the law as it now exists.
The Commission understands the Appellants' surprise when confronted with the increase in the 1995 assessment from the "negotiated or revised" 1994 assessment. However, in previous cases before the Commission where there have been sudden significant increases in assessment, the Commission has determined there is no rule or regulation requiring gradual increases and so the suddenness of the change cannot be used to invalidate the assessment.3 Therefore, the Commission cannot allow this appeal just because there was a sudden increase from the time the 1994 assessment was revised.
In conclusion, the Commission finds that the Minister has demonstrated the uniformity of assessment for the subject property for 1995, in relation to other assessments, pursuant to Section 28.(1) of the Act.
The appeal is therefore denied.
IN THE MATTER of an appeal by Daniel and Sandra Woodin against a decision by the Provincial Treasurer with respect to the 1995 assessment of Provincial Property Number 730408, located in Summerside, P.E.I.
Order
WHEREAS the Appellants, Daniel and Sandra Woodin have appealed the 1995 assessment of Provincial Property 730408;
AND WHEREAS the Commission heard the appeal at a public hearing conducted in Charlottetown on September 25, 1996;
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 hereby denied;
DATED at Charlottetown, Prince Edward Island, this 18th day of October, 1996.
BY THE COMMISSION:
John L. Blakney, Vice-Chair
Anne McPhee, 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.
1
Commission Order LT93-2, Robert B. and Mildred Jaynes v. Department of Finance, August 12, 1993.2
Real Property Assessment, 1992/1993 Course Manual, University of British Columbia Real Estate Division, p. 22-2, 1992.3
Commission Order LT93-4, Sleiman Wakim v. Department of Finance, August 11, 1973.
