Elsey v. Municipal Property Assessment Corporation, 2014 CanLII 96963

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE:

December 4, 2014

FILE NO.:

WR 127836A

AMENDED DECISION ISSUED ON: September 30, 2015

Assessed Person(s):

Scott Robert Elsey and Matina Elsey

Appellant(s):

Scott Elsey

Respondent(s):

Municipal Property Assessment Corporation (“MPAC”) Region 09

Respondent(s):

City of Toronto

Property Location(s):

15 Finchley Road

Municipality(ies):

City of Toronto

Roll Number(s):

1919-022-140-01400-0000

Appeal Number(s):

2983739 and 3014735

Taxation Year(s):

2013 and 2014

Hearing Event No.

561105

Legislative Authority:

Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended

APPEARANCES:

Parties

Counsel⁺/Representative

S. Elsey

S. Toor

MPAC

J. Twist

City of Toronto

No one appeared

HEARING EVENT INFORMATION:

Hearing:

Held in Toronto, Ontario on October 7, 2014

DECISION OF THE BOARD DELIVERED BY BARBARA KOWARSKY

Amended pursuant to Review Decision 035-14 dated September 25, 2015.

ISSUE

1The issue is to determine whether the assessment of 15 Finchley Road located in the City of Toronto (“subject property”) as returned at $1,613,000 for the 2013 and 2014 taxation years is correct, and whether it is equitable with that of similar lands in the vicinity.

DECISION

2In order to determine the value assessment of a property, the Assessment Review Board (“Board”) is legislated to follow two steps:

3Section 44.(3)(a) of the Assessment Act (“Act”) which requires the Board to:

(a) determine the current value of the land.

4The Board determines the current value to be $1,613,000 for the 2013 and 2014 taxation years.

5Section 44.(3)(b) of the Act directs the Board to:

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.

6The Board finds that an adjustment for equity pursuant to s. 44(13)(b) is not required and therefore confirms the assessment as returned at $1,613,000 for the 2013 and 2014 taxation years.

Amended pursuant to Review Decision 035-14 dated September 25, 2015.

REASONS FOR DECISION

The Subject Property

7The subject property, a two storey single family house, was built in 2006. It has a total building area of 3,488 square feet and is situated on a lot measuring 7,260 square feet. The house is classified as a quality 8. There is a two car attached garage.

The Position of MPAC

8MPAC was represented by James Twist. He submitted the following package of material into evidence, which is marked collectively as Exhibit 1:

i. A Market Analysis including nine suggested comparables situated in the same homogeneous neighbourhood as the subject property.

ii. An MPAC Report explaining how the “Price Changes over Time” are developed

iii. The list of the 240 sales used to develop the data involved in those calculations, and

iv. An Equity Analysis.

9He testified that:

i. Sale A, 33 Robin Hood Road, Sale C, 30 Wimbleton Road, Sale F, 19 Bromley Crescent, Sale H, 36 Lambeth Road and Sale I, 12 Canterbury Road, are the most comparable because they are all quality 8.

ii. He calculated the rate per square foot of each of these properties, and determined the median to be $508.00. He then applied this to the total building area of the subject property, arriving at a value of $1,773,000.

iii. This is greater than the assessed value as returned, and therefore he asked the Board to confirm the assessment of $1,613,000.

iv. The equity study of 30 homes resulted in an assessment to sales ratio (ASR) of 0.95. He suggested that this be applied to the current value of $1,773,000, which results in a value of $1,684,000, which is higher than the current value assessment.

v. Based on his two approaches, the Board should confirm the current value assessment of $1,613,000.

The Position of the Appellant

10Surin Toor, representative for the Appellant, submitted the following into evidence:

i. A summary report containing three suggested comparables and a proposed opinion of value (Exhibit 2).

11Mr. Toor agreed with Mr.Twist that the 0.95 equity factor “looks fair”.

12Mr. Toor testified that:

i. The property at 1423 Islington Avenue illustrated that heavier traffic patterns result in lower sale prices.

ii. The house directly next door to the subject property, 17 Finchley Road, is 14 years older, has a slightly larger lot (240 square feet) and a slightly smaller building area (167 square feet). It is assessed at $1,696,000.

iii. The time adjusted sale price of 17 Finchley Road is $1,344,000, which he calculated as 26 percent, or a time adjusted ASR of 1.26. This illustrates that the properties are over-assessed.

Amended pursuant to Review Decision 035-14 dated September 25, 2015.

iv. The property at 46 Robin Hood Road, which is also a quality 8, is 8 years older, has a slightly larger lot (240 square feet) and a slightly smaller building area (77 square feet).

v. The time adjusted sale price of 46 Robin Hood Road is $1,422,750, which he calculated as 13 percent, or a time adjusted ASR of 1.13. This illustrates that the properties are over-assessed.

vi. The use of a value per square foot results in a composite rate, and that if the differences are similar, the land and building values should offset each other.

vii. He does not agree with Mr. Twist’s suggested comparables, except 33 Robin Hood Road, because in most of the suggested comparables, the land and building differences do not offset each other; there are quality class variables and there may be traffic patterns that have not been addressed.

viii. His opinion of value is $1,500,000. The median ASR of 0.95 should be applied to this amount and that the assessment of the subject property should be $1,425,000.

13In summary, Mr. Toor argued that using the methodology of determining a rate per square foot and applying it to a property is only correct and relevant if the properties are similar and the lands and improvements are similar. If not, then using the face values of sales with a balanced distribution of sales dates on either side of the valuation date, is a fair approach to determining value.

The Legislation

14In arriving at a decision, the Board must consider the following provisions of the Act:

15Section 19.(1) of the Act states:

19.(1) Assessment based on current value. – The assessment of land shall be based on its current value.

16Section 1 of the Act states:

“current value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.

17Section 19.2(1)(2) of the Act provides:

19.2(1) Valuation days. – Subject to subsection (5)¹, the day as of which land is valued for a taxation year is determined as follows:

2. For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008.

3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years.

18Section 40.(17) of the Act provides:

40.(17) Burden of proof. – For 2009 and subsequent taxation years, where value is a ground of appeal, the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.

19Section 40.(19) of the Act states:

40.(19) Board to make determination. – After hearing the evidence and the submissions of the parties, the Board shall determine the matter.

20Section 44.(3)(a) and (b) of the Act states:

44.(3) Same, 2009 and subsequent years. – For 2009 and subsequent taxation years, in determining the value at which any land shall be assessed, the Board shall,

(a) determine the current value of the land; and

(b) have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with that of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment of the land.

Analysis and Findings

21The assessment legislation, as amended for taxation year 2009 and subsequent years, directs the Board to determine the current value of the subject property, having reference to the value at which similar lands in the vicinity have been assessed. Once current value is determined, the Board may reduce an assessment where it finds that it is inequitable with that of similar lands in the vicinity.

The Current Value of the Land

22The best evidence of current value is an arm’s length and market tested sale of the subject property on the valuation date, January 1, 2012, or close to it. This did not occur.

23Mr. Twist submitted nine suggested comparables ranging in age from 11 years older to six years newer than the subject property. The lot sizes range from 385 square feet smaller to 3,600 square feet larger, and structures that range from 472 square feet smaller to 562 square feet larger than the subject property. Five of these are described as quality class 8 and four are quality class 8.5.

24Mr. Twist testified that the best comparables are the five that are also quality class 8 (Sales A, C, F, H and I). He determined that the median rate per square foot, based on sales, is $508. He applied this to the subject property, and determined that the correct assessment should be $1,773,000, and since this is higher than the listed assessment, that the Board should confirm the assessment of $1,613,000.

25He suggested that the equity analysis result of 0.95 should be applied to $1,773,000 and since the result of this calculation is $1,684,000, again higher than the current value assessment, the Board should confirm the assessment of $1,613,000.

26There was no evidence submitted with which to quantify values regarding quality differences.

27The Board must rely on the evidence submitted, which it finds to be reliable, in order to make a fair, open and transparent decision.

28The Board rejects the following suggested comparables for the reasons listed:

i. Sale C – 10 Cudworth Place – the lot is 1,104 square feet smaller and the structure is 444 square feet smaller.

ii. Sale D – 69 Chestnut Hill Parkway – the lot is 354 square feet smaller, the house is 472 square feet smaller and it is a corner lot.

iii. Sale F – 19 Bromley Crescent - the lot is 1,104 square feet smaller and the structure is 444 square feet smaller.

iv. Sale H – 36 Lambeth Road - the lot is 780 square feet larger and the structure is 391 square feet larger.

v. Sale I – 12 Canterbury Road – the lot is 1,970 square feet larger.

29The Board finds the following MPAC suggested comparables to be the best evidence for the purpose of determining current value – 33 Robin Hood Road, 30 Wimbleton Road, 81 Chestnut Hill Parkway, 38 Hartfield Road; 17 Finchley Road and 46 Robin Hood Road. The Board calculated the rate per square foot of these six comparables. The resulting rate per square foot was $501.85, which was then applied to the subject property. By so doing, the current value of the subject property is $1,750,458 or $1,750,000, which is greater than the current assessed value as returned.

Equity with Similar Lands in the Vicinity

30The Board is required under s. 44.(3)(b) of the Act to have reference to the value at which similar lands in the vicinity are assessed and adjust the assessment of the land to make it equitable with land of similar lands in the vicinity if such an adjustment would result in a reduction of the assessment.

31Both parties accept the results of the MPAC Equity report. Mr. Twist submitted an MPAC Equity Report in which he analyzed 30 residential properties in close proximity to the subject property and which sold between January 1, 2011 to December 31, 2012. This analysis indicated the median assessment to time adjusted sale ratio to be 0.95.

32An ASR of 0.95 or less from a reasonable sample size indicates that MPAC’s methodology is producing values below market values and therefore an equity adjustment is required in this appeal. When the ASR is applied to the current assessed value of the subject property as determined above, the result is $1,662,500 or $1,662,000 rounded.

33The returned assessment of $1,613,000 is below the current values MPAC and the Board calculated as well as the corresponding equity adjusted values resulting from using the 0.95 ASR ($1,634,000 and $1,662,000).

CONCLUSION

34Based on the totality of the evidence presented the Board confirms the current value of the subject property at the returned value of $1,613,000 for the 2013 and 2014 taxation years.

Footnotes

1. 1Subsection 5 permits the Minister to prescribe a different valuation day. A different day has not been prescribed.