Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 8, 2015 FILE NO.: WR 130687

Assessed Person(s): 1700442 Ontario Ltd. Appellant(s): 1700442 Ontario Ltd. Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 9 Respondent(s): City of Toronto Property Location(s): 15 -17 Brydon Drive Municipality(ies): City of Toronto Roll Number(s): 1919-042-060-00200-0000 Appeal Number(s): 2998562, 3050641 and 3077563 Taxation Year(s): 2013, 2014 (and deemed 2015) Hearing Event No. 570138 Legislative Authority: Section 40 of the Assessment Act, R.S.O. 1990, c. A.31, as amended ARB Case Name: WR 130687 Heard: February 5, 2015 in Toronto, Ontario

APPEARANCES:

Parties	Counsel+/Representative
1700442 Ontario Ltd.	Daniel Attard
MPAC	Bashir Mohamed
City of Toronto	No one appeared

DECISION OF THE BOARD DELIVERED BY BARBARA KOWARSKY

ISSUE

1The issue is to determine whether the assessment of 15 -17 Brydon Drive, located in the City of Toronto (“subject property”) as returned at $3,430,000 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 $3,040,000 as at the January 1, 2012 valuation date..

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.(3)(b) is not required.

7Therefore, the assessment of the subject property is reduced from $3,430,000 to $3,040,000 for the 2013 and 2014 taxation years.

REASONS FOR DECISION

The Subject Property

8The subject property is situated on a lot measuring 2.35 acres. The building has a total area of 48,670 square feet comprising 435 square feet mezzanine floor and 5,474 square feet of interior finish. The average ceiling height is 20 feet. It was originally constructed in 1954 with additions in 1955, 1964 and 1980, which results in a suggested year built of 1964. MPAC is recommending that it be changed to full Commercial (CT) for both the 2013 and 2014 taxation years. The appellant agrees to the description and the classification change.

The Position of MPAC

9MPAC was represented by Bashir Mohamed. He submitted the following into evidence:

i. An MPAC summary report (Exhibit 1) ii. A RealNet Industrial Transaction Summary for 156 Disco Road (Exhibit 2) and iii. A RealNet Industrial Transaction Summary for 15 Vanley Crescent (Exhibit 4).

10He testified that:

i. He used the direct sales approach in his assessment analysis that includes seven suggested comparable properties, five of which are also used by the appellant. ii. Where he felt it was necessary and applicable, he made site area adjustments based on vacant land sales in the vicinity ($600,000 per acre), and ceiling height adjustments which he applied to the warehouse portions. iii. He used the Automatic Cost System (ACS), which analyzed the data and produced the results that he applied. iv. All seven of these properties are situated in the same locale as the subject property and are subject to the same market area and economic influences. v. The lot sizes of his suggested comparables range from 1.78 to 4 acres, the total building areas range from 36,131 square feet to 53,353 square feet, the ceiling heights range from 17 to 31 feet, and the year built ranges from 1954 to 1983. The sale prices range from $2,350,000 to $3,750,000. vi. The subject property falls in the mid range and therefore supports the assessment.

11Mr. Mohamed testified that in his opinion, the most comparable properties are 30 Bethridge Road, 307 Humberline Drive and 27 Leading Road. The sale prices of these properties range from $3,100,000 to $3,750,000, and the subject property’s assessment falls within this range.

12Finally, he referred to the equity report which he compiled. It lists 19 properties. The assessment to sales ratios (“ASR”) range from 0.64 to 1.58, the mean is 1.03 and the median is 1.0. Mr. Mohamed submits that no equity adjustment is necessary and that only the 2013 classification needs to be changed from industrial to commercial.

The Position of the Appellant

13The appellant is represented by Mr. Daniel Attard, who was the advocate and Mr. Andrew Attard, who gave evidence at the hearing.

14Mr. Daniel Attard submitted the following into evidence:

i. An analysis report (Exhibit 3) and ii. A copy of ARB decision Highland Equipment Ltd. v. Municipal Property Assessment Corp., Region No. 9, [2013] O. A. R. B. D. No. 157 during the summation of his position at the conclusion of the hearing.

15Mr. Andrew Attard testified that:

i. The GRAD report issued by MPAC for the 2012 base year value for the subject property, listed minimal property information (roll number, address and property code), site information, structure information and value calculation ($3,439,000), while a second Property Valuation issued by MPAC, also for the 2012 base year value, has more detailed information and has a heading “Selected Valuation Method: ACS” and lists the “Property Current Valuation Rounded” $2,672,000. ii. Mr. Mohamed indicated that the property is not assessed solely on costing. However the value of $2,672,000 is close to the value that he is seeking for his client ($2,700,000). iii. He analyzed sales of eight Toronto properties that took place in 2006 (the same year the property was purchased by his client) and found that 2006 sales were 25 percent higher than the 2006 purchase price of the subject property and the median sale price was 23 percent higher. He applied the 23 percent median to the 2006 purchase price and the result is $2,767,000, which is close to MPAC’s cost value of $2,672,000. iv. He also analyzed six current sales that occurred in 2011 and 2013, using MPAC’s rate of $600,000 per acre and used the time adjustment factor of 0.05 percent per month, as MPAC has used previously. v. He used the same six comparables as MPAC, but compared the unadjusted sale prices to the assessment values as returned for 2012, and not Mr. Mohamed’s ‘adjusted values’ used in the MPAC analysis. vi. MPAC has not taken the nuisance of the waste plant, located next to the subject property, into consideration, and vii. The assessment of the subject property is over-stated.

16Under cross-examination, Mr. Andrew Attard testified that:

i. He chose suggested comparables based on industrial buildings, similar size lots, total building areas, years built and that sold in 2006, but not necessarily based on location. ii. He acknowledged that 15 Vanley Crescent and 22 Benton Road are in North York. iii. Since 170 Claireville Drive is part of a portfolio sale (bundled properties), he withdraws it as a suggested comparable. iv. The use of 0.05 as a physical adjustment is nominal and a subjective value. v. He used 0.05 per month time adjustment because this is the same value that MPAC used. vi. When he applied the 0.05 time adjustment to the 65 months since the sale of the subject property, the resulting value is $3,026,000.

17In summary, Mr. Daniel Attard submitted that the average of MPAC’s six comparable sales (excluding 156 Disco Drive), is $60 per square foot. When this is applied to the subject property, the result is $2,910,000.

The Legislation

18In arriving at a decision, the Board must consider the following provisions of the Act:

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

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

20Section 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.

21Section 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.

22Section 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.

23Section 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.

24Section 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

25The 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

26The 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.

27The parties agree that the RealNet and Marsh Reports do not include the business in the total sale price of 156 Disco Drive whereas the Real Track Service Report indicates that the sale price includes the existing business. There is no clear evidence to authenticate this detail of the sale and, therefore, it is excluded from the Board’s analysis.

28Mr. Andrew Attard testified that the waste transfer station located next door to the subject property was already operating as such when the appellant purchased the property in 2006. In his opinion, the purchase price at the time reflected the negative effects of the waste transfer station, and that an ongoing negative adjustment should be applied to the subject property because of this neighboring property.

29One of the owners of the subject property, Mr. Rodomir Miljkovic, testified that when it rains, there is a terrible odor; when it is windy, there is a lot of dust and garbage “flying around”. He has complained to the Ministry of the Environment, but to date there have been no consequences. There has been flooding to the subject property from the street. There are sump pumps on the property to help with the flooding.

30No evidence was submitted to the Board in relation to any adjustments that the Board could apply to address these issues.

31The Board finds that the best evidence is that of the three comparables listed below. They are reasonably similar to the subject in terms of total building area, ceiling height and lot size

Address	2012 CVA	Lot (A)	Total Building Area (sq. ft.)	Ceiling Height (ft.)	Year Built	Sale Date	Sale price	Adjusted Sale Price	Value per sq.ft. based on Adjusted Sale Price($)
15-17 Brydon	3,430,000	2.35	48,503	20	1964
30 Brethridge	*4,329,000	4	40,969	18.5	1965	6/12	3,100,000	2,108,800	51
307 Humberline	3,935,000	3.01	48,486	21	1978	9/12	3,750,000	3,356,400	69
27 Leading Lane	3,279,000	3.15	51,968	21	1983	12/12	3,200,000	3,542,000	68

*This is the original 2012 CVA.

32The average value per square foot based on the time adjusted sale price is $62.67. When applied to the subject property, the result is $3,039,683.01or $3,040,000, rounded.

33The Board determines that the current value of the subject property as at January 1, 2012 is $3,040,000.

Equity with Similar Lands in the Vicinity

34The 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 similar lands in the vicinity if such an adjustment would result in a reduction of the assessment.

35Mr. Daniel Attard submitted a copy of the ARB decision Highland Equipment Ltd. v. Municipal Property Assessment Corp., Region No. 9 [2013] O. A. R. B. D. No. 157. Mr. Attard’s concern lies in the fact that Mr. Mohamed altered figures in the equity analysis that is included in his report of the subject property.

36The Board refers to the reasons as outlined in the aforementioned decision, and agrees with Member Cowan’s comments:

i. at paragraph 40: “One cannot begin to speculate as to how many “corrections” were made or missed in this study, as presented.” ii. at paragraph 41: “…the use of corrected assessments would only provide a moving target as to an ASR study’s implications. MPAC’s evidence provides no level of comfort that this process merits consideration respecting the appeal at issue.”

37The Board does not rely on the ASR study done at page 9 of Mr. Mohamed’s report because Mr. Mohamed changed the assessed values of certain properties within the study to reflect requests for reconsideration for those properties that occurred after this appeal commenced. These changes affect the ASR calculations and therefore skew the results so that they are not a true reflection of the values as at January 1, 2012.

38The Board is satisfied that the amended equity analysis (after the removal of 170 Claireville Drive from the list) submitted by Mr. Attard, resulted in a median of 1.02, which is well within the acceptable range and that no equity adjustment is required

CONCLUSION

39Based on the totality of the evidence presented, coupled with the findings of the Board, the assessment of the subject property is reduced from $3,430,000 to $3,040,000 for the 2013 and 2014 taxation years.

2015 DEEMED APPEAL

40An appeal for the 2014 taxation year is presently before the Board. Section 40.(26) provides that the Appellant is deemed to have made the same appeal for the subsequent taxation year if the appeal is not finally disposed of before March 31 of the subsequent taxation year. The Board has not disposed of the 2014 appeal before March 31, 2015. For that reason, this decision also applies to the 2015 taxation year.

41Section 40.(26) of the Act directs:

Deemed appeals, 2009 and subsequent years

For 2009 and subsequent taxation years, an appellant shall be deemed to have brought the same appeal in respect of a property,

(a) in relation to the assessments under sections 32, 33 and 34 for the year; and

(b) in relation to the assessment, including assessments under sections 32, 33 and 34, for a subsequent taxation year to which the same general reassessment applies, if the appeal is not finally disposed of before March 31 of the subsequent taxation year or, if an assessment has been made under section 32, 33 or 34, before the 90th day after the notice of assessment was mailed.

Footnotes

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