Kiran Malhotra v. Municipal Property Assessment Corporation, 2015 CanLII 18887

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 10, 2015

FILE NO.: WR 131186

Assessed Person(s): Kiran Malhotra

Appellant(s): Kiran Malhotra

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 15

Respondent(s): City of Brampton

Property Location(s): 10480 The Gore Road

Municipality(ies): City of Brampton

Roll Number(s): 2110-120-001-16800-0000

Appeal Number(s): 2984658, 3037224 and 3086796 (deemed 2015)

Taxation Year(s): 2013, 2014 (and deemed 2015)

Hearing Event No. 580956

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

ARB Case Name: WR 131186

Heard: December 18, 2014 and March 10, 2015 in Brampton, Ontario

APPEARANCES:

Parties

Counsel+/Representative

Kiran Malhotra

Gurjit S. Grewal

MPAC

Olivia Medeiros and Filipp Iannone

City of Brampton

Aida Karreman

DECISION OF THE BOARD DELIVERED BY FAUSTO SAPONARA

ISSUES

1Kiran Malhotra is the owner of the home and land located at 10480 The Gore Road in the City of Brampton. The property is a custom built single-family, detached 2 storey home, having a total area of 13,866 square feet, plus a finished basement area of 5,346 square feet. The home was built in 2004 and is situated on a 15.79 acres lot.

2The assessment as returned for the property is $5,625,000 for the taxation years 2013 and 2014.

3The Appellant disagrees with the assessed value. It is the Appellant’s position that most of the land is not buildable and that the value attributed to it by MPAC is too high. The Appellant also disagrees with the comparable properties used by the Assessor to justify the subject property assessment. Relying on the average sale price of four comparable properties identified by the Appellant and the value attributed to flood plain lands, it the Appellant’s position that the correct current value of the subject property as of January 1, 2012, is $4,338,000.

4It is MPAC’s position that although the subject property is very unique, the best indicator of current value is provided by the sale of three comparable properties. In MPAC’s view, the lack of similar properties in the vicinity justifies an expanded search area beyond the municipal boundaries of the subject property location. Furthermore, MPAC disagrees with the Appellant’s position that most of the land is non buildable. It is MPAC’s position that only 4.6 acres fall within the flood plain area and should be valued accordingly. It is MPAC’s position that the subject property is properly assessed and asks that the Assessment Review Board (“Board”) confirm the assessed value of $5,625,000.

5The Board’s task is to determine the current value of the subject property as of January 1, 2012 and whether a reduction to the assessment of the subject property is required in order to make it equitable with the assessments of similar lands.

DECISION

6The Board finds that the correct current value of the property located at 10480 The Gore Road, in the City of Brampton, as of January 1, 2012, is $4,933,000.

7Further, the Board finds that the assessment of the subject property at its current value is equitable with the assessments of similar lands in the vicinity and that a reduction in the assessment is not required to make it equitable.

8Accordingly, the assessment of the subject property as of January 1, 2012, is reduced from $5,625,000 to $4,933,000.

REASONS FOR DECISION

Determination of Current Value

9The initial task for the Board is to determine the current value of the subject property as required by s. 44.(3)(a) of the Assessment Act, R.S.O. 1990, c. A. 31 as amended (“Act”), which in part states that “…the Board shall…determine the current value of the land.”

10Section 19.(1) of the Act states that “…the assessment of land shall be based on its current value…”and s. 1 of the Act defines current value as “…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…”

11Section 40.(17) of the Act stipulates that “…the burden of proof as to the correctness of the current value of the land rests with the assessment corporation.”

Parties’ Arguments and Evidence

12Olivia Medeiros, testifying and advocating on behalf of MPAC, states that she used the Direct Sales Comparison approach to establish the subject property current value. The details of Ms. Medeiros’ analysis are documented in Exhibit 1. Using the sales of three properties that took place between May 2011 and May 2013, at prices ranging from $3,100,000 to $5,132,000, and after adjusting for lot size differences and changes in price levels, between the actual sale dates of the comparable properties and the January 1, 2012 valuation date, it is Ms. Medeiros’ conclusion, that the subject property’s current value of $5,625,000, as of January 1, 2012 is correct. Ms. Medeiros further submits that in order to find a home of similar size to the subject property, she had to search beyond the vicinity of the subject property. Ms. Medeiros acknowledges that the lot size and building area of the subject property makes it challenging to identify properties with similar dimensions.

13MPAC’s valuation of the subject property is based on an average sale price of $320 per square foot for two of the three proposed comparable properties and a $1,000,000 adjustment for the larger lot area of the subject property. By applying $320 per square foot to the subject property building area of 13,866 square feet, MPAC values the building and a two-acre lot at $4,442,000 by adding a $1,000,000 adjustment for the larger lot size of the subject property, the value derived is $5,442,000, which MPAC deems to be close enough to the assessed value as returned

14Mr. Grewal, representing the Appellant, disagrees with two of MPAC’s proposed comparable properties. In addition he disagrees with MPAC’s valuation of 11.19 acres of land as residential buildable land. It is the Appellant’s position that the best indicator of the subject property current value is provided by the sale prices of the four comparable properties that he has identified and by valuing 13.79 acres as flood pain lands at MPAC’s rate of $18,000 per acre. As detailed in Exhibit 6, Mr. Grewal submits that the average sale price of his proposed comparable properties is $294.97 per square foot and that by applying this value indicator to the subject property, the value of the property is $4,090,054 and that the value of the 13.79 acres non-buildable land is $248,000, resulting in a total value for the property of $4,338,000.

15In support of his position, Mr. Grewal called on Robert Lackey, Planning Consultant with over 40 years of experience in land use planning consulting. Mr. Lackey testified that he has extensive knowledge of the subject property going back to the 80’s, when he was retained to develop a plan of sub-division for the area. It was determined at that time, that 16 acres of land in the area of the subject property fell in the flood zone area and as such no housing development could be built, except for one house only. Mr. Lackey testified that only trees can be planted on the subject property lands beyond the two acres, or so, of land where the house is currently built. Mr. Lackey referred to the Site Plan, Services and Grading drawing per Exhibit 5, dated August 2000. According to the drawing, Mr. Lackey testified that most of the subject property falls within the regional storm boundary line delineation.

16To further confirm how many acres of the subject property falls within the floodplain, Mr. Grewal submitted as Exhibit 3, a letter from the Toronto and Region Conservation Authority (“TRCA”), dated December 2, 2014. In its letter, the TRCA states that according to its current mapping, “approximately 13.7 acres of the subject property appear to be located within the Regional Storm Floodplain.”

17Mr. Grewal also called on the property owner, Dr. Karin Malhotra to testify. Dr. Malhotra stated that he bought the property in 1999 and understood that he could build only one house on the land. According to this witness, past efforts to obtain approvals to build a mushroom growing and nursery facilities have failed and he has been told that only trees can be planted on his land.

18As evidence of the building constraints applicable to the subject property, Mr. Grewal submitted a letter from the City of Brampton, Planning, Design and Development Services, dated March 9, 2015. A copy of this letter was entered into the record as Exhibit 4. The letter states that development on the property is “generally prohibited” and that the current zoning by-law gives the property two distinct designations, being: “Floodplain (F)” and “Residential Estate Holding (REH-1534).” The zoning by-law does not permit buildings to be constructed in the F zone and only a single detached dwelling could be built in the REH-1534 zone. Based on the zoning provisions, the City states that only 2.36 of the available land could be potentially developed. However, given that the area falls within the Regional Storm Floodplain area, the City states that “it is unlikely that any development would be approved for the lands.”

19MPAC disagrees with the Appellant’s position on zoning and development potential of the land. In evidence, MPAC provided copies of two coloured maps delineating the property as zoning 1 and 2 areas, as per Exhibit 2. The map labelled “Zoning 1” shows in green the flood plain area, which although not measured, seems to be a small component of the total property. The map labelled “Zoning 2” shows in red that the bulk of the property falls in the “Zone Code REH-1534 Category Residential.” It is Ms. Medeiros position that based on this map most of the property is zoned residential and can be developed and therefore it is more valuable than non-developable flood plain lands.

Board’s Deliberations

Land Value

20Current value essentially means what a property would sell for on the open market in an arm’s length transaction on the valuation date. The best evidence of a property value would be the sale of the property itself. However, if there is no such sale, as is the case before the Board, the sales of similar properties which have taken place on or close to the January 1, 2012 valuation date, provide the best proxy evidence for determining the value of the subject property.

21The Board has two main issues to address. Firstly, it needs to make a finding on what portion of the subject property is located within the flood plain. Secondly, it needs to determine the current value of the land based on how much of it is buildable and how many acres are not. Following this determination, the Board’s next task is to determine the current value of the house located on the land, which when added to the value of the land, the overall current value of the subject property can be established.

22There is no dispute between the parties about the fact that a portion of the property is in a floodplain area and that this portion of the property is not as valuable as the buildable land area. The parties disagree on the area that is in the floodplain. The Assessor submits that 4.6 acres of the subject property is in the flood plain and the rest of the acreage is zoned residential and therefore it is buildable. The Appellant disagrees with the Assessor’s position and submits that most of the property, 13.7 acres, is located in the floodplain and no development can take place. Being non-developable land, it should be valued at MPAC’s established rate of $18,000 per acre.

23Mr. Lackey’s testimony is corroborated by the letters from the TRCA and the City of Brampton. The evidence before the Board clearly supports the Appellant’s position that most of the property is located in the Region Floodplain area. The site plan per Exhibit 5 supports this finding and the responsible authority for establishing and controlling floodplains says that this is the case. Page 2 of the TRCA letter per Exhibit 3, clearly states that “approximately 13.7 acres of the subject property appear to be located within the Regional Storm Floodplain.” The TRCA further states that “no new development is permitted within the Regional Storm Floodplain.” The restriction on development is further corroborated by the City of Brampton letter per Exhibit 4, in which it is confirmed that the zoning by-law does not permit buildings to be constructed in the floodplain area and that only 2.36 acres can be built, which is the area where the house has been built. The evidence per Exhibit 2 submitted by MPAC is in fact consistent with the Appellant’s evidence. However, the Board finds that MPAC is not correct to conclude that because an area is zoned residential, it necessarily follows that houses can be built. The City by-law Zoning designation for the larger portion of the property is REH-1534, which as explained in the letter from the City, only a single detached dwelling or group home can be built and goes on to state that “shall only be located within a specific portion of the REH-1534” zoned lands.

24Based on the evidence provided by the parties, the Board finds that 13.7 acres of the subject property are deemed to be located in the floodplain. The implications of determining what portion of the land is developable or not, is that different values are applicable. For floodplain lands, the Board, not having any other evidence, accepts the parties’ submission that the current value is $18,000 per acre. Therefore the Board finds that the total current value of the floodplain portion of the property is $246,600.

Building Value

25Having established the current value of the non-buildable portion of the property, the next task is for the Board to determine the current value of the dwelling and the approximately two acres of land on which it is situated on. The parties agree that the direct sales comparison approach is the appropriate valuation methodology, however they acknowledge that it has been challenging to identify an adequate number of comparable property sales, given the uniqueness of the subject property. MPAC has proposed three property sales that took place during the period of May 2011 to May 2013. The Appellant has provided four comparable properties in evidence of his own, and disagrees that one of the properties submitted by MPAC is similar to the subject property, because the property is located in a different municipality. Of the seven comparable properties submitted by the parties, the parties agree on one common comparable, 8 Julian Drive.

26The features of the three comparable properties proposed by MPAC are described in Appendix A, of Exhibit 1. The Board finds that the properties located at 8 Julian Drive and 6 Morris Court are located in the vicinity of the subject property and are large enough in building area and lot sizes to be valid comparable properties for the purpose of providing a value indicator for the subject property. The Board rejects MPAC’s proposed comparable property located at 124 Maple Grove Drive in the City of Oakville, for three reasons. First, the property is not in the vicinity of the subject property. Secondly, the lot size of this property is too small. Third, there is no need to expand the search beyond the subject property municipal boundaries given the availability of other proposed comparable properties in the vicinity of the subject property.

27The Appellant has proposed four comparable properties, three of which were sold on the open market, during the period of July 2010 to January 2013. Of the four properties proposed by the Appellant, the Board finds that the properties located at 10 Forestview Court and 8 Julian Drive, are located in the vicinity of the subject property, are situated on similar estate lots and have buildings large enough to be valid comparable properties for the purpose of providing a value indicator for the subject property. The Board rejects the Appellant’s proposed comparable property located at 10400 Torbram Road for having a too small a lot and the property located at 27 Bellini Avenue, for not having been sold on the open market.

28The Board finds that the following comparable properties as proposed by MPAC and the Appellant are sufficiently similar to the subject property to provide a valid indicator of its current value:

Property Address	Sale Date	Sale Price ($)	Total Area (sq. ft.)	Price/sq. ft. ($)
8 Julian Drive	May 2013	3,250,000	10,958	297
6 Morris Court	May 2011	3,100,000	9,008	344
10 Forrestview Court	December 2010	2,350,000	6,283	374
Average				338

29The value indicator provided by the three proposed comparable properties is $338 per square foot. By applying this value indicator to the subject property total building area of 13,866 square feet, the Board finds that the current value of the dwelling and approximately two acres of buildable land is $4,686,708 and as determined earlier, the current value of the remainder of the non-buildable land is $246,600, making the total current value of the subject property, as of January 1, 2012, equal to $4,933,308, which the Board rounds it to $4,933,000.

Determination of Equity

30Having established the current value of the subject property, the next task is for the Board to determine whether a reduction should be made to lower the assessment below current value in order to make it equitable to the assessments of similar lands in the vicinity.

31Section 44.(3)(b) of the Act states that “…the Board shall…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 land.”

32The Board was not provided with evidence on the assessments of similar properties in the vicinity of the subject property. Consequently, the Board is unable to determine whether a reduction to the current value of the property is warranted. Therefore, the Board finds that equity has been achieved and no further adjustment to the current value of the subject properties as determined above is required.

2015 DEEMED APPEAL

33An 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.

34Section 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.