Market Study Roadway Analysis November 2013 Diminution in Price, Injurious Affection
Lansink Appraisals and Consulting

Market Study Roadway Analysis November 2013 Diminution in Price, Injurious Affection

Real Estate Appraisers & Consultants A Division of Wellington Realty Group Inc.
Lansink Appraisals and Consulting

Prepared By

Ben Lansink, ACCI, P. App, MRICS
ben@lansink.ca     519-645-0750

Market Study: Introduction

This purpose of this study is to isolate any loss in price caused by external obsolescence, in this study, the effects of a roadway change.

External obsolescence, an event over which the property owner has no control, may be real or perceived and it may be different for each property. However, each example in this study illustrates some type of ‘harm’ or ‘injurious affection’ that can be caused to a real property as a result of a roadway event.

To determine any loss in price due to a roadway widening, roadway development/change, traffic increase, and/or an expropriation required for roadway events, a number of properties were analyzed based on roadway events that occurred along the frontage of the example properties.

The scope of the study included:

  • Passage of time measured by changes in average price. Average price includes sold residential property and does not include sold commercial or industrial real property. The average price used to adjust for time is provided by the Canadian Real Estate Association (based on the example property board specific statistics).
  • Market value of land. Diminution in price is best measured by the actions of willing sellers and willing buyers functioning in the open market place. All examples within the study involve actions within the open market place. The permanent loss or diminution in price is directly related to the remaining land (in the event of an expropriation) or the entire parcel (in the event of a road widening within existing roadway allowances).
  • Compensation for permanent loss to the remaining property as a result of External Obsolescence – Properties affected by a roadway event. These analyses are not a Direct Comparison approach. In fact, the examples were selected due to similar events of external obsolescence and the study properties may not be similar to each other. The majority of the examples within the study consider a roadway event where a “smaller road”, a two-lane local or secondary collector road, was developed and changed to a “larger road”, a four-lane arterial road.
  • Renovations. This study takes into consideration the effect of renovations completed by the buyer after purchase of a property. The expected return (ROI) value of the renovations is provided by RENOVA, a web-based guide to the value of home improvements developed by the Appraisal Institute of Canada. RENOVA is designed to give consumers a better idea of the return on investment they can expect for a variety of home improvements. RENOVA does this by providing a payback value range derived from the cost of the improvement. For example, a homeowner might indicate that he or she is considering spending $10,000 on remodeling the kitchen. RENOVA will then provide a payback amount for that particular renovation. The goal of RENOVA was to determine, in the informed opinion of Canada’s professional real property valuers, what effect home improvement projects have on the price of resale houses.
  • Market Value vs. Price. The market value of real property is an estimate; Price is an historic fact. This report does not estimate value, it considers Price, and therefore it is not an appraisal as defined by Canadian Uniform Standards of Professional Appraisal Practice.

Injurious Affection

In order to determine the detrimental affect or ‘injurious affection’ of an expropriation on the remaining lands of a real property, the appraiser must work within the guidelines of the Expropriation Act for the respective province.

The questions that need to be addressed are:

  1. Has the remaining property been harmed or injured by the expropriation? Is there external obsolescence (incurable by the owner)?
  2. Is there a reduction in market value…to the remaining land?
  3. Is there a set-off?

Ontario

Expropriations Act, R.S.O. 1990, CHAPTER E.26, Consolidation Period: From June 6, 2011 to the e-Laws currency date. Last amendment: 2011, c. 9, Sched. 27, s. 25.

Interpretation Definitions

1. (1) In this Act, “injurious affection” means,
  1. where a statutory authority acquires part of the land of an owner,
    1. the reduction in market value thereby caused to the remaining land of the owner by the acquisition or by the construction of the works thereon or by the use of the works thereon or any combination of them, and
    2. such personal and business damages, resulting from the construction or use, or both, of the works as the statutory authority would be liable for if the construction or use were not under the authority of a statute,
  2. where the statutory authority does not acquire part of the land of an owner,
    1. such reduction in the market value of the land of the owner, and
    2. such personal and business damages,
      resulting from the construction and not the use of the works by the statutory authority, as the statutory authority would be liable for if the construction were not under the authority of a statute,

and for the purposes of this clause, part of the lands of an owner shall be deemed to have been acquired where the owner from whom lands are acquired retains lands contiguous to those acquired or retains lands of which the use is enhanced by unified ownership with those acquired; (“effet préjudiciable”)

“land” includes any estate, term, easement, right or interest in, to, over or affecting land; (“bien-fonds”)

Compensation for Injurious Affection

21. A statutory authority shall compensate the owner of land for loss or damage caused by injurious affection. R.S.O. 1990, c. E.26, s. 21.

EXTERNAL OBSOLESCENCE

External obsolescence addresses factors that influence the property and are normally beyond the control of the real property owner. The Appraisal Institute of Canada defines external obsolescence as:

A temporary or permanent impairment of the utility or saleability of an improvement or property due to negative influences outside the property.

Types of external obsolescence may involve proximity to a land fill site, steel towers and electrical wires, an airport, a fire station, road works (that result in increased traffic, noise/air pollution, vandalism, theft, trespassing, and litter), a railway corridor, an industrial building next to single dwellings, and many others.

SET-OFF AGAINST DAMAGES, Sec 23.

The Ontario Expropriation Act, RSO, also addresses any advantages to the real property as a result of the expropriation. The monetary benefit of such advantages are subtracted from the damages and are known as “set-offs”.

The value of any advantage to the land or remaining land of an owner derived from any work for which land was expropriated or by which land was injuriously affected shall be set off only against the amount of the damages for injurious affection to the owner’s land or remaining lands.

The value of any advantage to the land or remaining land must be set-off but only against the amount of the damages for injurious affection to the land or remaining lands.

Supreme Court, January 30, 1997

Toronto Area Transit Operating Authority v. Dell Holdings Ltd., the Supreme Court of Canada stated:

Per La Forest, Sopinka, Gonthier, Cory, McLachlin and Major JJ.:

Since the Expropriations Act is a remedial statute, it must be given a broad and liberal interpretation consistent with its purpose to adequately compensate those whose lands are taken to serve the public interest.

Based on the recommendations of the Royal Commission Inquiry into Civil Rights and the Law Reform Commission report on expropriation an Expropriations Act was passed in 1968. That Act remains in substantially the same form today. It is clearly a remedial statute enacted for the specific purpose of adequately compensating those whose lands are taken to serve the public interest.

The expropriation of property is one of the ultimate exercises of governmental authority. To take all or part of a person’s property constitutes a severe loss and a very significant interference with a citizen’s private property rights. It follows that the power of an expropriating authority should be strictly construed in favor of those whose rights have been affected.

Further, since the Expropriations Act is a remedial statute, it must be given a broad and liberal interpretation consistent with its purpose. Substance, not form, is the governing factor.

‘It follows that the Expropriations Act should be read in a broad and purposive manner in order to comply with the aim of the Act to fully compensate a land owner whose property has been taken.”

Market Study: Diminution in Price Caused by a Roadway Event

The study that follows is not a static document.

It will continue to evolve and be edited as new research and Price evidence is collected.

Example: 114 Ardagh Road, Barrie

As reported by Leonard Borgdorff, Senior Project Engineer, City of Barrie, Ardagh Road (from Patterson Road to Ferndale Drive) was widened from two lanes to four lanes with the majority of construction during 2004 and 2005. The roadway was opened in late 2005/2006.

At present, the roadway is painted for two lanes with on-street parking until the traffic volume justifies four lanes.

The property sold before and after the road construction was commenced and completed. The details are as follows:

  • 114 Ardagh Road sold on July 22, 1997 (via MLS #9703646).
    Price: $155,000
    Seller: Houter
    Buyer: Wale
    PIN: N/A
    Area (MLS): 18 metres x 37.99 metres (or 683.82 sq. metres)
    Area (Land Registry): N/A
  • On June 5, 2002, PIN 58760-0444 was registered as a severed parcel to ‘The Corporation of The City of Barrie’. The area of the parcel is 92 sq. metres.
  • 114 Ardagh Road sold on March 6, 2007 (via MLS #0700352):
    Price: $267,000
    Seller: Wale
    Buyer: Walton
    PIN: 58760-0445
    Area (MLS): 18 x 26.96 metres (or 485.28 sq. metres)
    Area (Land Registry): 483 sq. metres

Based on the MLS descriptions, a number of improvements were made between the 1997 and 2007 sale dates. These include a fully finished basement, central air conditioning, a new roof (in 2005), and a gas fireplace.

The following page outlines the calculations required to analyze the diminution in value caused by the roadway changes, if any. The calculations considered are as follows:

  • State the sale date and sale price before the construction/event occurred;
  • State the sale date and sale price after the construction/event occurred;
  • Determine the RENOVA expected return for any improvements made to the property;
  • Calculate an adjusted sale price based on the RENOVA renovation expected returns;
  • Determine the average residential price on the date of purchase before;
  • Determine the average residential price on the date of purchase after;
  • Calculate an adjustment based on passage of time;
  • Calculate percentage loss, if any.
  • Conclude the diminution in Price (injurious affection), if any.
Sale Date 1 Jul 22, 1997
Sale Price 1 $155,000
Sale Date 2 Mar 6, 2007
Sale Price 2 $267,000
Adjustment for Time from Sale Date 1 to Sale Date 2
Average 3 Month Price: Sale Date 1 (~ July 1997) $140,569
Average 3 Month Price: Sale Date 2 (~ March 2007) $255,886
% Change     from: Average Price (Sale Date 1) to: Average Price (Sale Date 2)         ——————————- A 82.04%
Sale Price 1         ——————————- B $155,000
$ Adjustment         ——————————- A x B = C $127,156
ADJUSTED Sale Price 1         ——————————- B + C $282,156
Add Renovations to Adjusted Sale Price 1
Renovation Expected Cost Expected Return (ROI) * Selected Return (ROI) Expected Return Value Total Expected Added Value
Basement $15,000 50% to 75% 50% $7,500 $22,500
Air Conditioning $2,500 25% to 75% 25% $625 $3,125
Roof $10,000 25% to 75% 25% $2,500 $12,500
Gas Fireplace $1,500 50% to 75% 50% $750 $2,250
ADJUSTED Sale Price 1 $282,156
ADJUSTED Sale Price 1 + Renovations $322,531

* The “Expected Return (ROI)” is provided by RENOVA.

Conclusion 114 Ardagh Road, Barrie
The property should have sold for… (adjusted for time and renovations) $322,531
The property sold for… $267,000
Monetary Loss $267,000
Percentage Loss (Diminution in Price) -17.22%

Example: 154 Ardagh Road, Barrie

As reported by Leonard Borgdorff, Senior Project Engineer, City of Barrie, Ardagh Road (from Patterson Road to Ferndale Drive) was widened from two lanes to four lanes with the majority of construction during 2004 and 2005. The roadway was opened in late 2005/2006.

At present, the roadway is painted for two lanes with on-street parking until the traffic volume justifies four lanes.

The property sold before and after the road construction was commenced and completed. The details are as follows:

  • 154 Ardagh Road sold on January 16, 2003 (via MLS #0206249).
    Price: $149,500
    Seller: Sawdon / Winkler
    Buyer: Crombie
    PIN: N/A
    Area (MLS): 38.10 metres x 27.42 metres (irregular)
    Area (Land Registry): N/A
  • On October 10, 2003, PIN 58761-0229 was registered as a severed parcel to ‘The Corporation of The City of Barrie’. The area of the parcel is 116 sq. metres.
  • 154 Ardagh Road sold on January 13, 2006 (via MLS #0507389):
    Price: $158,000
    Seller: Crombie
    Buyer: Arnold
    PIN: 58761-0230
    Area (MLS): 38.10 metres x 27.42 metres (irregular)
    Area (Land Registry): 939 sq. metres

Based on the MLS descriptions, it appears there were little to no improvements made between the dates. However, it was observed that a parking area was created by the City of Barrie with access from Ardagh Road.

The following page outlines the calculations required to analyze the diminution in value caused by the roadway changes, if any. The calculations considered are as follows:

  • State the sale date and sale price before the construction/event occurred;
  • State the sale date and sale price after the construction/event occurred;
  • Determine the RENOVA expected return for any improvements made to the property;
  • Calculate an adjusted sale price based on the RENOVA renovation expected returns;
  • Determine the average residential price on the date of purchase before;
  • Determine the average residential price on the date of purchase after;
  • Calculate an adjustment based on passage of time;
  • Calculate percentage loss, if any.
  • Conclude the diminution in Price (injurious affection), if any.
Sale Date 1 Jan 16, 2003
Sale Price 1 $149,500
Sale Date 2 Jan 13, 2006
Sale Price 2 $158,000
Adjustment for Time from Sale Date 1 to Sale Date 2
Average 3 Month Price: Sale Date 1 (~ January 2003) $191,635
Average 3 Month Price: Sale Date 2 (~ January 2006) $233,396
% Change     from: Average Price (Sale Date 1) to: Average Price (Sale Date 2)         ——————————- A 21.79%
Sale Price 1         ——————————- B $149,500
$ Adjustment         ——————————- A x B = C $32,579
ADJUSTED Sale Price 1         ——————————- B + C $182,079
Add Renovations to Adjusted Sale Price 1
Renovation Expected Cost Expected Return (ROI) * Selected Return (ROI) Expected Return Value Total Expected Added Value
$0
Total Expected Return of Renovations $0
ADJUSTED Sale Price 1 $182,079
ADJUSTED Sale Price 1 + Renovations $182,079

* The “Expected Return (ROI)” is provided by RENOVA.

Conclusion 114 Ardagh Road, Barrie
The property should have sold for… (adjusted for time and renovations) $182,079
The property sold for… The property sold for…
Monetary Loss -$24,079
Percentage Loss (Diminution in Price) -13.22%

Example: 188 Ferndale Drive South, Barrie

As reported by Leonard Borgdorff, Senior Project Engineer, City of Barrie, Ferndale Road (from Ardagh Road past Summerset Drive) was widened from two lanes to four lanes with the majority of construction during 2006 and 2007. The roadway was opened in November 2007.

The property sold before and after the road construction was commenced and completed. The details are as follows:

  • 188 Ferndale Drive South sold on November 7, 2003 (via MLS #0305160).
    Price: $235,000
    Seller: Marshall
    Buyer: Fraser
    PIN: 58763-0086
    Area (MLS): 15.10 metres x 35 metres
    Area (Land Registry): 527 sq. metres
  • No land was taken for the road widening.
  • 188 Ferndale Drive South sold on July 3, 2008 (via MLS #0804054):
    Price: $277,000
    Seller: Fraser
    Buyer: Ouroumis
    PIN: 58763-0086
    Area (MLS): 15.10 metres x 35 metres
    Area (Land Registry): 527 sq. metres

Based on the MLS descriptions, only a few improvements were made between the 2003 and 2008 sale dates. These include minor refurbishments and central air conditioning.

The following page outlines the calculations required to analyze the diminution in value caused by the roadway changes, if any. The calculations considered are as follows:

  • State the sale date and sale price before the construction/event occurred;
  • State the sale date and sale price after the construction/event occurred;
  • Determine the RENOVA expected return for any improvements made to the property;
  • Calculate an adjusted sale price based on the RENOVA renovation expected returns;
  • Determine the average residential price on the date of purchase before;
  • Determine the average residential price on the date of purchase after;
  • Calculate an adjustment based on passage of time;
  • Calculate percentage loss, if any.
  • Conclude the diminution in Price (injurious affection), if any.
Sale Date 1 Nov 7, 2003
Sale Price 1 $235,000
Sale Date 2 Jul 3, 2008
Sale Price 2 $277,000
Adjustment for Time from Sale Date 1 to Sale Date 2
Average 3 Month Price: Sale Date 1 (~ November 2003) $201,166
Average 3 Month Price: Sale Date 2 (~ July 2008) $265,360
% Change     from: Average Price (Sale Date 1) to: Average Price (Sale Date 2)         ——————————- A 31.91%
Sale Price 1         ——————————- B $235,000
$ Adjustment         ——————————- A x B = C $74,992
ADJUSTED Sale Price 1         ——————————- B + C $309,992
Add Renovations to Adjusted Sale Price 1
Renovation Expected Cost Expected Return (ROI) * Selected Return (ROI) Expected Return Value Total Expected Added Value
Air Conditioning $2,500 25% to 75% 25% $625 $3,125
Total Expected Return of Renovations $3,125
ADJUSTED Sale Price 1 $309,992
ADJUSTED Sale Price 1 + Renovations $313,117

* The “Expected Return (ROI)” is provided by RENOVA.

Conclusion 114 Ardagh Road, Barrie
The property should have sold for… (adjusted for time and renovations) $313,117
The property sold for… $277,000
Monetary Loss -$36,117
Percentage Loss (Diminution in Price) -11.53%

Example: 163 Professor Day Drive, Bradford

As reported by Vince Musacchio, Capital Projects, Bradford West Gwillimbury, Professor Day Drive (from Holland Street West to 8th Line) was widened from two lanes to four lanes with the majority of construction during 2007. The roadway was opened in 2008. Professor Day Drive was extended north to 8th Line.

The property sold before and after the road construction was commenced and completed. The details are as follows:

  • 163 Professor Day Drive sold on March 21, 2006 (via MLS #N863695).
    Price: $257,000
    Seller: Medeiros
    Buyer: Cull / Delaney
    PIN: 58032-0994
    Area (MLS): 9 metres x 36.58 metres
    Area (Land Registry): 332 sq. metres
  • No land was taken for the road widening.
  • 188 Ferndale Drive South sold on July 3, 2008 (via MLS #0804054):
    Price: $274,000
    Seller: Cull / Delany
    Buyer: Saqib
    PIN: 58032-0994
    Area (MLS): 9 metres x 36.58 metres
    Area (Land Registry): 332 sq. metres

Based on the MLS descriptions, only a few improvements were made between the 2006 and 2009 sale dates. The major refurbishment outlined was a basement renovation.

The following page outlines the calculations required to analyze the diminution in value caused by the roadway changes, if any. The calculations considered are as follows:

  • State the sale date and sale price before the construction/event occurred;
  • State the sale date and sale price after the construction/event occurred;
  • Determine the RENOVA expected return for any improvements made to the property;
  • Calculate an adjusted sale price based on the RENOVA renovation expected returns;
  • Determine the average residential price on the date of purchase before;
  • Determine the average residential price on the date of purchase after;
  • Calculate an adjustment based on passage of time;
  • Calculate percentage loss, if any.
  • Conclude the diminution in Price (injurious affection), if any.
Sale Date 1 May 7, 2006
Sale Price 1 $257,000
Sale Date 2 Apr 27, 2009
Sale Price 2 $274,000
Adjustment for Time from Sale Date 1 to Sale Date 2
Average 3 Month Price: Sale Date 1 (~ May 2006) $246,003
Average 3 Month Price: Sale Date 2 (~ April 2009) $260,079
% Change     from: Average Price (Sale Date 1) to: Average Price (Sale Date 2)         ——————————- A 5.72%
Sale Price 1         ——————————- B $257,000
$ Adjustment         ——————————- A x B = C $14,705
ADJUSTED Sale Price 1         ——————————- B + C $271,705
Add Renovations to Adjusted Sale Price 1
Renovation Expected Cost Expected Return (ROI) * Selected Return (ROI) Expected Return Value Total Expected Added Value
Basement $20,000 50% to 75% 50% $10,000 $30,000
Air Conditioning $2,500 25% to 75% 25% $625 $3,125
$0
Total Expected Return of Renovations $33,125
ADJUSTED Sale Price 1 $271,705
ADJUSTED Sale Price 1 + Renovations $304,830

* The “Expected Return (ROI)” is provided by RENOVA.

Conclusion 114 Ardagh Road, Barrie
The property should have sold for… (adjusted for time and renovations) $304,830
The property sold for… $274,000
Monetary Loss -$30,830
Percentage Loss (Diminution in Price) -10.11%

Example: 253-255 Commissioners Road East, London

A portion of the analysis, “Diminution in Value Study – Reconstruction of Adelaide Street”, is cited from Lansink Appraisals and Consulting files. The analysis is also included within “A Case Study: Injurious Affection (Lazar v. Hydro One)”, by Ben Lansink, AACI, P.App, Lansink Appraisals and Consulting.

The owner of 245 Commissioners Road East applied to rezone his 3.25-acre property for medium density residential but did not succeed.

He then applied for and was successful in severing two lots (69,171 sq. ft. total). Each lot was suitable for single detached dwelling construction and use.

The two lots, 253-255 Commissioners, were sold to Mortimer/Brocklehurst in December 1999 for $115,000 each, or $230,000 for both, or $3.39 per square foot for 67,795 square feet total. A total of 1,376 square feet was dedicated to the City of London for road widening.

The purchasers were aware the road would be enlarged to four lanes and there would be a new sidewalk and bicycle path along the front of their land. The home sits well back from Commissioners Road as the purchasers constructed their home with the footprint close to the rear lot line.

Area Breakdown
Part M2 Sq. Ft. Purchaser-Owner Sq. Ft.
1 2,899.70 31,212.11 Brocklehurst-Mortimer 31,212.11
2 2,119.90 22,818.41 22,818.41
3 1,091.40 11,747.73 11,747.73
4 140.70 1,514.48 1,514.48
5 63.90 687.81 Dedicated to City of London(about 10 Feet wide) 0.00
6 9.60 103.33 0.00
7 9.60 103.33 0.00
8 44.70 481.15 0.00
9 23.90 257.26 Brocklehurst-Mortimer 257.26
10 22.80 245.42 245.42
Square Feet Dedicated to City 1,375.63
Total Area (Sq. Ft.) Purchased by Brocklehurst-Mortimer 67,795.41
Purchase Price (two Deeds) $230,000
Purchase Price (price per square foot) $3.39
Possible Value – Lot suitable for single detached dwelling use – Dec 1999
No. Location Date Sold Price Square Feet $/Sq. Ft.
i 173 Base Line Rd May-99 $100,000 17,117 $5.84
ii 692 Hillcrest Jun-99 $82,000 12,465 $6.58
iii 1103 Riverside Oct-99 $62,500 13,498 $4.63
iv 1099 Riverside Oct-99 $62,500 10,000 $6.25
v 26 Old Mill Ct Feb-00 $90,000 10,000 $9.00
Median Price $6.25
The subject sites were much larger at about 33, 900 sq. ft. each, hence a downward adjustment is made 25.0%
Adjusted Median Price $4.69
Note: There are lot sales at about $18.00 per sq. ft. located on Edwin which is close to 253-255 Commissioners; however these sales did not occur until July 2001.
Injurious Affection
a Average Price 1999 $131,254
b Average Price 1999 $131,254
c Market Change over period $0 $0
d Actual Price 1999 $3.39
e Add Market Change 0.00% $0
f Market Price 1999 $3.39
g Market Value 1999 $4.69
h Injurious Affection -$1.30

Example: 465 Ridout Street South, London

A portion of the analysis, “Diminution in Value Study – Reconstruction of Adelaide Street”, is cited from Lansink Appraisals and Consulting files. The analysis is also included within “A Case Study: Injurious Affection (Lazar v. Hydro One)”, by Ben Lansink, AACI, P.App, Lansink Appraisals and Consulting.

Summary

In 2000, the City of London purchased 465 Ridout Street for $170,000. The vendors sold the property to the City of London under threat of expropriation; hence it was not an open market sale. The vendors did not pay Realtors® commission and the City paid the vendors a moving allowance.

In the open market place, vendors typically pay Realtors® fees and all moving costs.

Adjusted, the vendors received an open market price of $195,500 ($170,000 + $25,500), in other words the vendors effectively received $195,500 but it is assumed they had to pay Realtors® fees and all moving costs similar to a typical open market sale.

The City of London purchased the entire property, 817 m2 or 8,794 sq. ft.

The City of London retained 151 m2 or 1,625 sq. ft. or 18.5% of the property for the widening of Ridout Street and Commissioners Road East.

In 2003, the City of London sold 465 Ridout Street consisting of 666 m2 or 7,169 sq. ft. for $160,000 with the City, as vendor, reportedly paying Realtors® commission, which is typical of the open market.

Note that the building was constructed facing Commissioners Road; however ingress/egress is from Ridout Street The building footprint hugs its northerly boundary sitting as far as possible from the road allowance for Commissioners Road, which results in a normal-appearing front yard.

The following page outlines the calculations required to analyze the diminution in value caused by the roadway changes, if any. The calculations considered are as follows:

  • State the sale date and sale price before the construction/event occurred;
  • State the sale date and sale price after the construction/event occurred;
  • Determine the RENOVA expected return for any improvements made to the property;
  • Calculate an adjusted sale price based on the RENOVA renovation expected returns;
  • Determine the average residential price on the date of purchase before;
  • Determine the average residential price on the date of purchase after;
  • Calculate an adjustment based on passage of time;
  • Calculate percentage loss, if any.
  • Conclude the diminution in Price (injurious affection), if any.
Sale Date 1 Jun 1, 2000
Sale Price 1 $170,000
Adjustment to reflect Realtors® fees, moving cost, etc. 15%
ADJUSTED Sale Price 1 $195,500
Sale Date 2 Aug 19, 2003
Sale Price 2 $160,000
Adjustment for Time from Sale Date 1 to Sale Date 2
Average 3 Month Price: Sale Date 1 (~ June 2000) $135,857
Average 3 Month Price: Sale Date 2 (~ August 2003) $154,092
% Change     from: Average Price (Sale Date 1) to: Average Price (Sale Date 2)         ——————————- A 13.42%
Sale Price 1         ——————————- B $195,500
$ Adjustment         ——————————- A x B = C $26,240
ADJUSTED Sale Price 1         ——————————- B + C $221,740
Add Renovations to Adjusted Sale Price 1
Renovation Expected Cost Expected Return (ROI) * Selected Return (ROI) Expected Return Value Total Expected Added Value
$0
Total Expected Return of Renovations $0
ADJUSTED Sale Price 1 $221,740
ADJUSTED Sale Price 1 + Renovations $221,740

* The “Expected Return (ROI)” is provided by RENOVA.

Conclusion
The property should have sold for… (adjusted for time and renovations) $221,740
The property sold for… $160,000
Monetary Loss -$61,740
Percentage Loss (Diminution in Price) -27.84%

Example: 788 Oxford Street West, London

Oxford Street is a major east west arterial road in London. The section of Oxford Street West between the rail overpass and Hyde Park Road was reconstructed to five lanes with one lane being a turning lane. Construction commenced in 2005 and ended in early 2006.

The Average Annual Daily Traffic (AADT) had been approximately 15,000 prior to construction and was expected to increase to approximately 33,500 after construction.

The following page outlines the calculations required to analyze the diminution in value caused by the roadway changes, if any. The calculations considered are as follows:

  • State the sale date and sale price before the construction/event occurred;
  • State the sale date and sale price after the construction/event occurred;
  • Determine the RENOVA expected return for any improvements made to the property;
  • Calculate an adjusted sale price based on the RENOVA renovation expected returns;
  • Determine the average residential price on the date of purchase before;
  • Determine the average residential price on the date of purchase after;
  • Calculate an adjustment based on passage of time;
  • Calculate percentage loss, if any.
  • Conclude the diminution in Price (injurious affection), if any.
Sale Date 1 Nov 18, 2005
Sale Price 1 $150,000
Sale Date 2 Apr 24, 2008
Sale Price 2 $189,900
Adjustment for Time from Sale Date 1 to Sale Date 2
Average 3 Month Price: Sale Date 1 (~ November 2005) $181,183
Average 3 Month Price: Sale Date 2 (~ April 2008) $211,530
% Change     from: Average Price (Sale Date 1) to: Average Price (Sale Date 2)         ——————————- A 16.75%
Sale Price 1         ——————————- B $150,000
$ Adjustment         ——————————- A x B = C $25,124
ADJUSTED Sale Price 1         ——————————- B + C $175,124
Add Renovations to Adjusted Sale Price 1
Renovation Expected Cost Expected Return (ROI) * Selected Return (ROI) Expected Return Value Total Expected Added Value
“Aya” Kitchen $25,000 75% to 100% 75% $18,750 $43,750
Bathroom 1 $7,500 75% to 100% 75% $5,625 $13,125
Bathroom 2 $5,000 75% to 100% 75% $3,750 $8,750
Central Air $2,500 25% to 75% 25% $625 $3,125
Total Expected Return of Renovations $68,750
ADJUSTED Sale Price 1 $175,124
ADJUSTED Sale Price 1 + Renovations $243,874

* The “Expected Return (ROI)” is provided by RENOVA.

Conclusion 114 Ardagh Road, Barrie
The property should have sold for… (adjusted for time and renovations) $243,874
The property sold for… $189,900
Monetary Loss -$53,974
Percentage Loss (Diminution in Price) -22.13%

Example: 736 Oxford Street West, London

Oxford Street is a major east west arterial road in London. The section of Oxford Street West between the rail overpass and Hyde Park Road was reconstructed to five lanes with one lane being a turning lane. Construction commenced in 2005 and ended in early 2006.

The Average Annual Daily Traffic (AADT) had been approximately 15,000 prior to construction and was expected to increase to approximately 33,500 after construction.

The following page outlines the calculations required to analyze the diminution in value caused by the roadway changes, if any. The calculations considered are as follows:

  • State the sale date and sale price before the construction/event occurred;
  • State the sale date and sale price after the construction/event occurred;
  • Determine the RENOVA expected return for any improvements made to the property;
  • Calculate an adjusted sale price based on the RENOVA renovation expected returns;
  • Determine the average residential price on the date of purchase before;
  • Determine the average residential price on the date of purchase after;
  • Calculate an adjustment based on passage of time;
  • Calculate percentage loss, if any.
  • Conclude the diminution in Price (injurious affection), if any.
Sale Date 1 Nov 18, 2005
Sale Price 1 Sep 12, 1990
Sale Date 2 Jan 5, 2007
Sale Price 2 $155,000
Adjustment for Time from Sale Date 1 to Sale Date 2
Average 3 Month Price: Sale Date 1 (~ September 1990) $134,920
Average 3 Month Price: Sale Date 2 (~ January 2007) $195,623
% Change     from: Average Price (Sale Date 1) to: Average Price (Sale Date 2)         ——————————- A 44.99%
Sale Price 1         ——————————- B $126,000
$ Adjustment         ——————————- A x B = C $56,690
ADJUSTED Sale Price 1         ——————————- B + C $182,690
Add Renovations to Adjusted Sale Price 1
Renovation Expected Cost Expected Return (ROI) * Selected Return (ROI) Expected Return Value Total Expected Added Value
0
Total Expected Return of Renovations $0
ADJUSTED Sale Price 1 $182,690
ADJUSTED Sale Price 1 + Renovations $182,690

* The “Expected Return (ROI)” is provided by RENOVA.

Conclusion 114 Ardagh Road, Barrie
The property should have sold for… (adjusted for time and renovations) $182,690
The property sold for… $155,000
Monetary Loss -$27,690
Percentage Loss (Diminution in Price) -15.16%

Example: 736 Oxford Street West, London

Oxford Street is a major east west arterial road in London. The section of Oxford Street West between the rail overpass and Hyde Park Road was reconstructed to five lanes with one lane being a turning lane. Construction commenced in 2005 and ended in early 2006.

The Average Annual Daily Traffic (AADT) had been approximately 15,000 prior to construction and was expected to increase to approximately 33,500 after construction.

The following page outlines the calculations required to analyze the diminution in value caused by the roadway changes, if any. The calculations considered are as follows:

Comparable criteria were as follows:

  • All properties on Oxford Street West in this study are within the reconstructed area.
  • Each property is the same vintage, design and offers similar utility.
  • All dwellings are in the 1,000 to 1,300 sq. ft. range and all have finished basements.
  • All properties sold in 2006 or 2007.

The calculations considered are as follows:

  • Calculate the sale price per square foot of building including land for each property.
  • Calculate the average and median of sale price per square foot of building including land.
  • Compare averages of Oxford Street West properties versus comparable properties.
  • • Calculate percentage loss, if any.
Oxford Street West Sales (Arterial Roadway)
Address MLS Date Sold Sale Price Sq. Ft. Sale Price per Sq. Ft.
736 Oxford Street West Jan 05-07 $155,000 999 $155.16
736 Oxford Street West Jul 11-07 $221,900 1,290 $172.02
796 Oxford Street West Jun 15-07 $180,000 1,065 $169.01
Average $/Sq. Ft. of Building Including Land $165.39
Median $/Sq. Ft. of Building Including Land $169.01
Comparable Sales (Local Street/Secondary Collector, 1 to 2 blocks south of Oxford Street West)
Address MLS Date Sold Sale Price Sq. Ft. Sale Price per Sq. Ft.
750 Inverness Avenue Jun 28-06 $217,500 1,077 $201.95
127 Deer Park Circle Aug 23-06 $217,000 1,050 $206.67
727 Inverness Avenue Jun 29-07 1,185 $202.53
700 Inverness Avenue Apr 26-07 $238,000 999 $238.24
696 Inverness Avenue Jun 21-06 $184,000 1,063 $173.10
706 Inverness Avenue May 27-06 $199,900 1,147 $174.28
200 Deer Park Circle Jun 26-07 $238,900 1,203 $198.59
Average $/Sq. Ft. of Building Including Land $199.34
Median $/Sq. Ft. of Building Including Land $201.95
Diminution in Value Calculation
Arterial Oxford Street West Sales Average $/Sq. Ft. of Building Including Land $165.39
Local or Secondary Collector Sales Average $/Sq. Ft. of Building Including Land $199.34
$ Difference -$33.94
% Difference -17.03%

Conclusion

The above analysis illustrates, via the open market place, that a property on an Arterial Road (Oxford Street West) sold for less than a property on a Local or Secondary Collector roadway.

A property should have sold $199.34 per sq. ft. of building including land

for…

A property sold for… $165.39 per sq. ft. of building including land

Therefore, the Arterial Roadway location has caused a diminution in Price of approximately 17.03%.

Municipal Property Assessment Corporation

The Municipal Property Assessment Corporation (MPAC) is a non-profit Provincial corporation that completes assessments for all real property in Ontario. The valuation system used by MPAC is based on current value assessment (CVA).

For each assessment, MPAC uses industry-standard Computer Assisted Mass Appraisal techniques to analyze sales and property data across the province. The primary valuation tool within the Computer Assisted Mass Appraisal is ‘Multiple Regression Analysis’, a statistical tool used by assessing authorities to automate the sales comparison approach to value in a mass appraisal setting. Within Multiple Regression Analysis, multiple variables are used in the calculation of the value assessment. MPAC uses ‘abutment and proximity variables’ within the calculations.

The diagram below, as sourced from the MPAC website, provides an example of a subject property. The lots with the ‘A’ would typically be considered to be abutting the subject property. The lots with the ‘P’ would typically be considered as being in proximity to the subject property.

Traffic Pattern (light)

Property fronts or sides onto a street that feeds into specific subdivision from primary or secondary road. One of main roads is in a subdivision.

Traffic Pattern (medium)

Property fronts or sides onto a street or highway subject to intermittent flow of traffic throughout the day.

Traffic Pattern (heavy)

Abuts – property directly fronts street or highway, subject to constant flow of traffic throughout entire day. Typically considered as major artery in municipality in urban area with several traffic lights to control traffic.

Proximity – property indirectly fronts, backs or sides onto street or highway subject to constant flow of traffic throughout entire day. Typically considered as major artery in municipality in urban area with several traffic lights to control traffic.

Traffic Pattern (extremely heavy)

Abuts – property directly fronts, backs or sides onto a 400-series highway or equivalent (e.g., Don Valley Parkway). Generally, has two or more lanes of traffic in each direction and controlled access to highway.

Proximity – property indirectly fronts, backs or sides onto a 400-series highway or equivalent (e.g., Don Valley Parkway). Generally, has two or more lanes of traffic in each direction and controlled access to highway.

MPAC reported that the variable values for diminution caused by either abutment or proximity to a traffic pattern used within the ‘Multiple Regression Analysis’ vary from neighbourhood to neighbourhood and model to model. The diminution in value percentages are in the range of:

-3% to -17%

Effects of a Roadway: General Overview

There are real or perceived effects, risks, and concerns when a high traffic volume roadway is constructed, used, and maintained. There are many reasons why property buyers discount the price of property along a high traffic volume roadway.

The following section of this study provides examples of possible effects, risks, and concerns related to high traffic volume roadways. .

Respiratory and Heart Problems

  • Traffic pollution can prevent the lungs of children who live near busy roads from developing properly, making them more likely to suffer respiratory and heart problems later in life, U.S. researchers said on Friday (Jan. 26, 2007).
  • They found that children who had lived within 500 yards of a highway from the age of 10, had significantly less lung function by the time they reached 18 than youngsters exposed to less traffic pollution.

Source: msnbc.com news services, 2007, http://www.msnbc.msn.com/id/16831975/ns/health-kids_and_parenting/

Premature Deaths

  • The Ontario Medical Association says that air pollution is responsible for 59,000 emergency room visits and 5,800 premature deaths every year. Poor air quality costs our province almost $10 billion a year. Cars and trucks aren’t the only cause of this, but they are a major contributor, and we have the power ourselves to do something about it.
  • While cars and trucks contribute to smog, emissions from these vehicles affect us at the most local level. Research shows that, when vehicles are banned from city streets, hospitalizations for asthma go down. And air pollution gets worse the closer you live to a major road, especially one with frequent traffic jams.

Effects of Noise Pollution on Health

Noise pollution can be caused due to various sources – there is street noise, traffic noise, noise in public transport places…

Noise pollution can take a severe toll on human health in the long run. These effects will not become apparent immediately, but there could be repercussions later on. The following is a list of the kinds of effects noise pollution will have on human health after continuous exposure for months, and even years:-

  • The most immediate effect is a deterioration of mental health. As an example, people who are living too close to airports will probably be quite jumpy. Continuous noise can create panic episodes in a person and can even increase frustration levels. Also, noise pollution is a big deterrent in focusing the mind to a particular task. Over time, the mind may just lose its capacity to concentrate on things.
  • Another immediate effect of noise pollution is a deterioration of the ability to hear things clearly. Even on a short-term basis, noise pollution can cause temporary deafness. But if the noise pollution continues for a long period of time, there’s a danger that the person might go stone deaf.
  • Noise pollution also takes a toll on the heart. It is observed that the rate at which heart pumps blood increases when there is a constant stimulus of noise pollution. This could lead to side-effects like elevated heartbeat frequencies, palpitations, breathlessness and the like, which may even culminate into seizures.
  • Noise pollution can cause dilation in the pupils of the eye, which could interfere in ocular health in the later stages of life.
  • Noise pollution is known to increase digestive spasms. This could be the precursor of chronic gastrointestinal problems.

A “Position Paper” released by Germany estimates that for each 1dB(A) increase in noise levels, average property values fall by 0.5%.

Asthma and Reduced Lung Function

People living or otherwise spending substantial time within about 200 m of highways are exposed to these pollutants more so than persons living at a greater distance, even compared to living on busy urban streets. Evidence of the health hazards of these pollutants arises from studies that assess proximity to highways, actual exposure to the pollutants, or both. Taken as a whole, the health studies show elevated risk for development of asthma and reduced lung function in children who live near major highways.

Cancer, Asthma, Premature and Low-Birthweight Babies

Air pollution from motor vehicles increases rates of cancer, asthma, premature and low-birthweight babies and creates other health woes. And the closer you live to congested roads, the greater the danger to your health.

Pneumonia

Our study found that among older individuals, long-term exposure to traffic pollution independently increased their risk of hospitalization for pneumonia,” principal investigator, Mark Loeb, M.D., of McMaster University, Ontario, Canada.

Birthweight

Scientist has found the relationship between exposure to traffic pollution and the affect of the development of babies in the womb. A mother who has a high level of exposure in early and late stages of pregnancy are more likely that the baby would not grow properly although more detailed research into the link was necessary.

Mental and Physical Health Problems

Excessive traffic noise is one of the most common complaints among American residents. Millions of people are affected by constant traffic noise in their own home. In fact, traffic noise impacts more people than any other environmental noise source. Traffic noise can affect the ability to work, learn, rest, relax, sleep, etc. Excessive noise can lead to mental and physical health problems. If your home is near a major road or you are experiencing problems with traffic noise, you may be able to limit the impact on yourself and your family.

Hyper-tension

Results from studies of road traffic noise and hypertension are heterogeneous with respect to effect size, effects among males and females and with respect to effects across age groups. The study supports an association between road traffic noise at high average levels and self-reported hypertension in middle-aged.

Market Study: Conclusions

Property Land Taken? Diminution in Price
114 Ardagh Road, Barrie Yes -17.22%
154 Ardagh Road, Barrie Yes -13.22%
188 Ferndale Drive South, Barrie No -11.53%
163 Professor Day Drive, Bradford No -10.11%
253-255 Commissioners Road East, London Yes -38.27%
465 Ridout Street, London Yes -27.84%
788 Oxford Street West, London No -22.13%
736 Oxford Street West, London No -15.16%
Oxford Street, London No -17.03%
Average Loss -19.17%
Median Loss -17.03%
Minimum Loss -10.11%
Maximum Loss -38.27%
MPAC Diminution in Value
Traffic Pattern (Abutment and Proximity) -3% to -17%

The purpose of this market study was to “determine any loss in Price due to a roadway widening, roadway development/change, traffic increase, and/or an expropriation required for roadway events” and to isolate any loss in value caused by the external obsolescence (the roadway event).

By analyzing the price of these properties before and after the roadway event, this study has determined that external obsolescence caused by ‘roadway events’ has a negative effect on the Price, hence value of properties abutting the roadway.

Most people have an opinion regarding obsolescence and the effect on themselves, their surroundings, their property, and on society. The harm may be real or perceived and it may be different for each property and to each property seller and buyer. Compensation for Price diminution, hence value diminution, to the remaining property as a result of obsolescence, injurious affection, is best measured by the actions of willing sellers and willing buyers functioning in the open market place.

This is a value diminution analysis based on the BEFORE road construction value vs. the actual price AFTER road construction. Nissouri Road was widened and reconstructed by the County of Middlesex.

The vacant Lot at 22060 Nissouri Road sold for $83,000 in May of 2012.

The taking was a narrow strip of land running next to and parallel to Nissouri Road.

The estimated compensation for Injurious Affection was estimated to be zero percent or $0, nil, by the Expropriating Authority.

The appraisal report stated: …an estimated $18.50 per square meter is considered the best indication of current value for the subject property.

Based on the market value estimate of $18.50 per M2, the estimated Fee Simple Market Value of the Land AFTER Expropriation was:
Land Area Before Expropriated Land Area After $/Unit Value
5,662.00 M2 250.00 5,412 $18.50 $100,122
60,945.26 Sq. Ft. 2,690.98 58,254.28 $1.64 $100,122

A portion of the Expropriation Act, 25. (1), follows:

(a) offer the registered owner immediate payment of 100 per cent of the amount of the market value of the owner’s land as estimated by the expropriating authority…

The County’s estimated land value was $18.50 $/M2 for the Sec. 25 payment.

22060 Nissouri Road – Aerial AFTER the taking

The property at 22060 Nissouri Road sold in May of 2012 “AFTER” the expropriation and the road reconstruction for $83,000. The property, a vacant lot suitable for dwelling construction and use, had been offered on the open market. Several persons made inspections.

After a few months the seller’s accepted an Agreement of Purchase and Sale.

The December 2009 Sec. 25 value “BEFORE” was $100,122 and the open market sale was only $83,000.

The new home constructed is set-back about 180 feet from the new pavement’s edge.

When adjusted for the passage of time, this sale provides very strong evidence that the road taking and road works resulted in a diminution of minus -28.67%.

Passage of Time Calculation, Injurious Affection, 22060 Nissouri Road
The average MLS® price – London and St. Thomas Association of REALTORS® in December 2009 was $215,582 per dwelling. In May 2012, the date to the property sold, the average MLS® price was $250,547 per dwelling resulting in a Change of 16.22%. Market Price May 2012 $250,547
Market Price December 2009 $215,582
$Change $34,965
%Change 16.22%
The subject site was valued for the County of Middlesex as of December 2009 BEFORE the easement taking for $100,122 but would have resold May 2012 assuming NO easement taking for $116,361. Sec 25 Actual Value December 2009 $100,122
%Change 16.22%
$Change $16,239
Sec 25 Adjusted Value May 2012 $116,361
However, the Actual Price on May 2012 after the easement taking was $83,000, a loss of -$33,361. Actual Price May 2012 $83,000
$Difference -$33,361
Diminution in Value: -28.67%. %Difference -28.67%

The County of Middlesex determined that the vacant lot at 22060 Nissouri Road would NOT be injuriously affected by the taking and concluded zero per cent (0%) estimated Injurious Affection.

22044 Nissouri Road

Certification by Ben Lansink – Market Study

I, Ben Lansink, certify to the best of my knowledge and belief that:

This document is not an appraisal report, a technical review, or a consulting report, as defined by the Appraisal Institute of Canada. It is a Market Study, an analysis of Price facts pertaining to residential properties. This study does not estimate market value of a specific property, rather the percent diminution in Price, if any. Price is an historic fact; value is an opinion.

The statements of fact contained in this study are true and correct.

The reported analyses, opinions, and conclusions are my personal impartial and unbiased professional analyses, opinions, and conclusions. No one provided professional analysis assistance to me.

I have no known bias and no present or prospective personal interest with respect to the issues that are the subject matter of this Case Study, or to the public who may receive this Study.

The writing of this Study was not contingent upon developing or reporting predetermined results, the amount of the Price diminution, or a conclusion favouring anyone.

My analyses, opinions, and conclusions were developed, and this Case Study has been prepared, in conformity with (1) the Canadian Uniform Standards of Professional Appraisal Practice (CUSPAP), Appraisal Institute of Canada; (2) the Uniform Standards of Professional Appraisal Practice (USPAP), Appraisal Standards Board, United States; and (3) the International Valuation Standards (IVS).

I have the knowledge and experience to complete this Study competently.

The Appraisal Institute of Canada has a Continuing Professional Development Program. As of January 2014, I have fulfilled the requirements of this Program. I am a member in good standing of the Appraisal Institute of Canada.

Should any evident errors or omissions or additional undisclosed or unavailable facts become known, I reserve the right to revise this Study and its findings.

Respectfully submitted,

sign

Ben Lansink, AACI, P.App, MRICS      Date: January 2014

Lansink Appraisals and Consulting

Telephone: 519-645-0750      Email: ben@lansink.ca

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