HomeMy WebLinkAboutTR-27-81 Memorandum
TO: Chairman & Members of the Finance & Adminstration Committee
FROM: Klaas Degroot, C.G.A. , Treasurer
DATE: April 15, 1981
SUBJECT: O.M.B. Decision M80491
ITEM: TR-27-81
Recommendation:
"Recieved for information"
Report:
The attached O.M.B. decision relates to an appeal to the O.M.B.
from a decision by the courts related to an assessment appeal . While I
do not have the expertise or particular knowledge of the process to comment
on the decision, I do believe that the description of the process by
which the assessment department arrives at market value and assessment for
an individual property is most informative and I would urge you to take
a moment to read the decision for that purpose.
K. Degroot.
081-OMB-1
N180491
Ontario
Ontario Municipal Board
._._,IN2THE MATTER OF Section 63 of The Assess-
ment Act, (R.S.O. 1970, c. 32),
- and - PIP
IN THE MATTER OF an appeal from the deci- 10*11',
sion of His Honour Judge Currelly, Judge of the
Regional Municipality of Durham, dated the
27th 'day of July, 1980, with respect to the
assessment returned for taxation in 1979 of
premises known municipally as Part of Lot 6,
Concession 4 in the Town of Newcastle, Assess-
ment Roll Number 18 17 010 010-185 00
BETWEEN:
The Regional Assessment Commissioner,
Region Number 13
Appellant
- and -
John and William Harmer and the Corporation
of the Town of Newcastle
Respondents
C O U N S E L. :
Daniel J. Balena - for the Regional Assessment Commis-
sioner
Irwin A. Hamilton - for John and William Harmer
DECISION OF THE BOARD delivered by D.M. ROGERS
In this hearing, the Board was asked to consider the proper method of
assessing a property in the Town of Newcastle which property consisted of
34.215 acres of land upon which was situate a quarry which had been
substantially worked out but upon which there still remained a small building,
the assessment of which is not contested and upon which there was still a
relatively small amount of quarrying and screening taking place.
There is a factor provided by the Legislature which when multiplied
by the total land value gives the assessed value and this factor is not in
contest in this hearing. It is the Board's function to establish the land value.
2 - M 80491
The Assessment Department in this area use a formula for assessing
all lands used for quarrying. They firstly take approximately 10 per cent of
the total acreage and assess this at a rate per acre which is found for all of
the lands in the Town of Newcastle and which is, in this particular area,
$11,000 per acre for a three-acre part of the parcel bringing about then a total
land value for that three acres of $33,000 to which is added the building on the
three acres which, as indicated, is not in contention here for a total value of
$40,500. This'is the basis used in valuing lands in those parts of quarries used
for screening, storage, stock piling and similar functions.
The $11,000 rate is obtained from the actual market value or sales
value of aggregate lands within the area and is therefore a land value based on
actual sales to produce market.
There is then added to this a value of $4,000 per acre for 10 acres or
$40,000 again multiplied by a factor from the regulations to establish an
assessed value. It is considered that 10 acres of land will bring a higher price
per acre than will the larger acreages and they therefore obtain the market
value for 10-acre parcels within the area of the subject property and this
market value is apparently the sum of $40,000.
They then obtain the sarne type of information with respect to any
parcels over 10 acres and here determine that the value of land should be
$1,200 per acre but, as this land is not quite as good as some other lands, they
have reduced this to $1,100 an acre so that then the 21.215 acres is multiplied
by $1,100 per acre to bring up a land value of $23,336.50, again multiplied by a
factor to produce the assessment.
It is this method then of determining the assessment which is being
challenged for the reason that while the opposition do not question the method
insofar as operating quarries, they feel it is unfair that this same formula
should be used for this quarry which has, according to their evidence, been
substantially worked out. They feel that the same market value should not
pertain to a parcel of land which is of no value as opposed to a parcel of land
ready to be mined for gravel.
3 - M 80491
The Assessment Department'say that they are not judging the value
of the parcel of land for quarrying as no one can be certain of its value as the
depth of the rock cannot be accurately gauged, and the existence of any
pockets of rock cannot be determined, so they simply take this as raw land and
do not add anything for its value as a quarry or, on the other hand, delete
anything because, in their impression or in the impression of the owner, the
lands are no longer suitable for quarrying. They point out further that the
lands are assessed on a residential basis until mining actually takes place when
of course business assessment would also be added and the formula be used.
They say that the Assessors cannot vary the land value by the amount
of stone which is being, or is capable of being, extracted.
The Department further argued that as the Ministry of Natural
Resources holds back a sum whereby to rehabilitate the land after it is
completely quarried, that the land should then be worth as much as the
surrounding lands. If, in other words, the property were being sold, it would be
sold at its improved value and the fact that it is an open pit would not be
relative to its value.
The Board has some difficulty in agreeing that this land can be
assessed at the same market value as lands which are available for farming
purposes and upon which the land is sufficiently arable to support a viable
farming operation or with a parcel for which aggregate can be taken for sale
purposes. It would seem that there must be some method by which there could
be a variation in the land prices between farming land and quarrying land and
depleted quarrying land. If some such method were determined based on
market value then, if the quarry were in fact worked out to an extent that the
owner could establish to the department, then the land value would be
depreciated to that extent. We agree that the owner might be wrong in this
interpretation of the length of time that the land could still be worked because
of his lack of knowledge of the depth of stone or pockets of stone. We further
agree that the Assessment Department would not be in a position to judge this.
It would seem, however, that a great deal of judgment must be used by the
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Department at various times in judging the values of such things for example
as towers containing restaurants, or buildings, such as the Sun Life Building.
They would have to use the best judgment that they have subject always to
being challenged by the owner of the property.
The subject of the Assessment is land having a very special value,
that is, a value for quarrying. Its market value would be affected by its
continued usefulness for a quarrying site and therefore it would seem that this
would be the proper basis under which to establish its assessment. It would
further seem that it would not be proper to establish a market value for land
based on its bare land value as farm land when it is not, in fact, farm land but
rather land having a special use or potential for use.
We believe that this case points up the problems involved in using the
formula, which may be quite satisfactory to bring equity as amongst operating
quarries. The formula cannot be used to reflect the state of depletion of a
quarry.
The Board is then faced with the difficult problem of attempting to
establish a market value for this property which may be related with operating
quarries in the area which have a potential. for being used for at least some
years in the future.
We believe it is also necessary for the Board to take into considera-
tion the unusual shape of the property and the fact that it could not be
quarried to any substantial depth whether or not there was rock because of the
existence of the high water table and the difficulty of pumping it and the
contouring of the lands from the lot lines.
As has been indicated in this judgment it is hoped that a new method
of assessment of quarries can be established so that this particular property
may be brought into relationship with all others.
5 - M 80491
We believe that the best that the Board can do, faced with the lack
of methodology, is to establish some method of determination of the amount
by which this particular parcel of land is depreciated.
It would seem that the total value on land would be $93,365 if this
land had never been used for quarrying but was readily available for such
purposes. It would seem that it has been quarried out until not more than 25
per cent of that value could be said to remain inclusive of the part being used
for screening, the building and for storage. Rather than simply reducing the
assessment of land by the 75 per cent, something must be added as it does
continue to exist as a parcel of land. It would seem that if the assessment
were divided in half, that this might be an acceptable solution to the problem.
A new formula reflecting depletion may be obtained for the future so that the
assessment could more accurately reflect its current usefulness. The Board
recognizes the fact that the assessment would have to be changed each year
on quarries if the assessment is to be based on the amount of stone which is
left after the quarrying operations in any preceding year. This will require an
annual evaluation of the amount of stone left to be provided by the
perspective owners of the properties and to be checked by some method by the
Assessment Department. We cannot see that any other method would be fair
in the circumstances and would reflect the reduction in the market value by
the continuing utilization of the non-renewable resource.
The land value is therefore established as $46,685 to which must be
added the uncontested value of the building making the land and building value
$54,185. This will then be multiplied by the legislative factor which will, in
the case of the first three acres being actually used for the operation, be
.07089 and for the balance of the land, being the non-operational land, .04994.
For the purposes of establishing the land value for the first three acres, take
three acres over the total acreage of the parcel times the total land value
therefore being $4,093 and the balance of 31.215 acres will be valued at
$42,592.
The business assessment was not in contest at 30 per cent.
6 - M 80491
The Board will assume the costs of the reporter.
DATED at TORONTO this 7th day of April, 1981.
D.M. ROGERS
MEMBER