Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 16, 2015

FILE NO.: WR 128286

Assessed Person(s): Ditursi Construction Limited

Appellant(s): Ditursi Construction Limited

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

Respondent(s): City of Brampton

Property Location(s): 184 Mill Street South

Municipality(ies): City of Brampton

Roll Number(s): 2110-030-022-06800-0000

Appeal Number(s): 3043396, 3033343 and 3083541 (deemed 2015)

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

Hearing Event No. 560093

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

ARB Case Name: WR 128286

Heard: May 5, 2014 in Brampton, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

Ditursi Construction Limited

D. Attard and A. Attard

MPAC

J. Mercier

City of Brampton

A. Karreman

DECISION OF THE BOARD DELIVERED BY CRISTINA MARQUES

ISSUE

1The subject property is located at 184 Mill Street South in the City of Brampton, and is described as follows:

• 184 Mill Street South is a 39 unit High Rise comprised of:

13 one - bedroom units

26 two - bedroom units

2The records of MPAC indicate that the building was built in 1968 with a lot area of 0.86 acres.

3Both parties agree that the dispute before the Assessment Review Board (“Board”) is centered on the Gross Income Multiplier (“GIM”) used to calculate the Current Value Assessment (“CVA”).

4Johanne Mercier, appearing for MPAC, takes the position that the correct GIM of 8.74 was used, and that based on gross income of $447,846 she maintains that the assessment of the high-rise building is correct, and should be confirmed by the Board.

5Daniel Attard, appearing as the counsel for the Appellant, takes the position that the assessment for the subject property is too high in comparison to similar properties. He is of the opinion that a 7.79 GIM results in a more realistic valuation for a current value of $3,489,000.

6For taxation years 2013 and 2014 the assessment was returned pursuant to the Assessment Act (“Act”) using a modeled gross income approach to value, and at $3,950,000.

7The Board must determine if the assessments for 2013 and 2014 taxation years reflect correct the current value as of the legislated valuation day, January 1, 2012, and if they are equitable, having reference to the assessments of similar lands in the vicinity.

DECISION

8The Board finds that the current value is $3,489,000 for the 2013 and 2014 taxation years.

9The Board also finds that an assessment at current value does not require an adjustment below current value to make it equitable with the assessments of similar lands in the vicinity.

10The Board reduces the assessment from $3,950,000 to $3,489,000 for the 2013 and 2014 taxation years.

REASONS FOR DECISION

Legislation

11The Board must have regard to s. 1, 19.(1), 19.2(1), 40.(17), 40.(19), 44.(3)(a) and (b) of the Act when determining whether or not the assessment under appeal is correct.

12Section 1 of the Act defines current value as follows:

“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.

13Section 19.(1) of the Act states:

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

14Section 19.2(1) of the Act provides:

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

1. For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005.

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.

15Section 40.(17) of the Act States:

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.

16Section 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.

17Section 44.(3)(a) and (b) of the Act state:

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.

Current Value – Analysis and Evidence

Position of MPAC

18Ms. Mercier testified that multi-residential properties transact in the market on the basis of the income that they are able to generate. Multi-residential properties are valued by MPAC using a gross income approach to value. The Gross Potential Income (“GPI”) for the property is multiplied by a GIM to arrive at the assessment. When MPAC calculates GIM for any given base year that they use the income at the time of sale, while considering structure design and sale stratified according to design.

19Ms. Mercier, in support of the assessment as returned, presented Exhibit 1 consisting of a document asserting the assessor’s position in relation to the valuation attributed to the subject property, and her position in relation to Mr. Attard’s conclusions.

20The assessor relied on four sales, of medium high-rise properties, to determine whether the property is assessed at or close to its current values. The suggested comparables are located in the City of Brampton, and have a mix of bachelors, one bedroom, two bedroom, and three bedroom units, as the subject property. Ms. Mercier submits that the four comparables support the assessment as returned.

21Ms. Mercier in support of her findings also presented Exhibit 1A consisting of a list of MPAC’s GIM and ASR calculations for their comparable properties, as well as for the Appellants comparables. As found out during cross-examination, and the assessor’s own admission, some of the calculations are incorrect. Hence the Board is disregarding the evidence presented.

22Ms. Mercier testified that MPAC’s GIM calculations for the four suggested comparable are based on 2005 and 2008 base years because MPAC did not receive rental data in order to formulate the relative data for the 2012 base year.

23Ms. Mercier submitted that the market for high rise and medium-rise properties is rising in Southern Ontario, and that the City of Brampton is no different. She indicated that a GIM lower than 8.00 is unrealistic. On the other hand Mr. Attard presented detailed evidence in regards to the four comparables presented by MPAC as well as two additional properties, all located in Brampton showing GIM’s of less than eight.

24During cross-examination Mr. D. Attard requested MPAC’s list of rental income for each of the sales presented as comparable. He submits that without income information it is impossible to test the GIM. Ms. Mercier submitted that MPAC cannot disclose information protected by the confidentiality provisions in the Act, but that it is a criminal offence for owners to give incorrect information to MPAC. Therefore she submitted that Mr. D. Attard can be confident that the data used to value the subject property is correct. Since Mr. D. Attard did not bring a disclosure motion before the Board prior to the hearing, the hearing continued.

Position of the Appellant

25Mr. D. Attard submitted Exhibit 3 consisting of a property profile with photographs, two comparable sales, and a Curriculum Vitae for Andrew Attard.

26Mr. D. Attard asked the Board to qualify Mr. A. Attard as an expert witness. Ms. Mercier agreed, that Mr. A. Attard possesses sufficient qualifications through his education and experience that he is qualified to express opinions in the valuation of properties such as the subject property. The Board qualified Mr. A. Attard as an expert witness.

27Mr. A. Attard testified that properties transact in the market place based on current income. As such for the 2013 taxation year his evidence is that the current valuation calculations should be based on 2012 data. Hence, Mr. Attard presented in Exhibit 3 MPAC’s proposed comparables with 2012 data. Ms. Mercier did not challenge the accuracy of this data.

28Details of each property proposed by MPAC, as presented by the Appellant:

1. 26 June Street South – sold March, 2007 for $4,600,000

2012 assessment $4,602,000 - GIM 8.76 - ASR 1.0

2. 80 Scott Street – sold August, 2009 for $6,535,287

2012 assessment $7,163,000 - GIM 7.76 - ASR 1.10

3. 192 Mill Street South – sold July, 2007 for $3,735,000

2012 assessment $4,527,000 - GIM 7.53 - ASR 1.21

4. 176 Mill Street South – sold July, 2007 for $3,735,000

2012 assessment $4,342,000 - GIM 7.22 - ASR 1.16

29The Appellant’s evidence package page 23 Exhibit 3, shows that for 2012 base year for the 2013 taxation year that the Fair Market Rent (“FMR”) for the subject property is $447,846.

30Exhibit 3 also includes five proposed comparables properties. Three of the properties were removed by the Appellant before the beginning of the hearing. Mr. A. Attard testified that the Appellant would rely only on the remaining two sales of medium high rise properties.

31The two sales relied upon by the Appellants, are located in the City of Brampton, like the subject property. The suggested comparables have a mix of bachelors, one bedroom, two bedroom, and three bedroom units.

32Each property is described as follows:

1. 182 Church Street East – Built in 1972 with 93 units

Sold in September 2011 for $7,350,000

2012 Assessment $8,772,000

GIM 7.04 – ASR 1.19

2. 161 Church Street East – Built in 1962 with 61 units

Sold in January 2011 for $5,978,000

2012 Assessment $6,109,000

GIM 8.42 – ASR 1.02

33Mr. D. Attard argued that the subject property should be valued using a GIM of 7.79 ( being the average of the Appellant’s and MPAC’s comparables, as calculated by Mr. Attard) for a valuation of $3,489,000.

The Board’s Analysis – Section 44.(3)(a) – Current Value

34The 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. If no such transaction has taken place, the Board looks to sales of comparable properties in the vicinity to determine if the sales evidence suggests that current value requires correction.

35In this case the Board has sales occurring between July 2007 and September 2011. The six properties are located in Brampton, as is the subject property.

36The Board agrees with the Appellant, that current value is best established by using the most current data available, and Ms. Mercier did not present evidence as to why she did not use current data, and elected to use 2005 and 2008 data. Hence the Board will analyze the uncontested data provided by Mr. A. Attard.

37The correct current value is best established by multiplying the FMR by the GIM to arrive at the 2012 current value. The Board agrees that the comparables presented by both parties, six in total, provide enough evidence to generate a proper analysis of correct current value for the subject property. The average GIM of the six Brampton properties is 7.79, and established by the actual sales in the vicinity. Hence the Board calculates the correct current value to be ($447,846 x 7.79) = $3,489,000 (rounded).

Equity Analysis

38Section 44.(3)(b) mandates and directs that after determining current value, the Board shall have reference to the value at which similar lands in the vicinity are assessed. The Assessment to Sale Ratio (“ASR”) is a tool often used to determine if similar lands in the vicinity are assessed below their current value. The ASR is determined by dividing the assessment as returned with the time adjusted sale price.

39An ASR falling below 1.0 is an indication that MPAC’s valuation methodology may be resulting in assessments below values determined in the market place. Conversely, an ASR falling above 1.0 is an indication that MPAC’s valuation methodology may be resulting in assessments above values determined in the market place.

40Ms. Mercier introduced no evidence for the purpose of s. 44.(3)(b), because the onus respecting the Act’s equity provision rests with the Appellant.

41Details of the sales entered into evidence are summarized below:

• 26 June Street South – sold March, 2007 for $4,600,000

2012 assessment $4,602,000 - GIM 8.76 - ASR 1.0

• 80 Scott Street – sold August, 2009 for $6,535,287

2012 assessment $7,163,000 - GIM 7.76 - ASR 1.10

• 192 Mill Street South – sold July, 2007 for $3,735,000

2012 assessment $4,527,000 - GIM 7.53 - ASR 1.21

• 176 Mill Street South – sold July, 2007 for $3,735,000

2012 assessment $4,342,000 - GIM 7.22 - ASR 1.16

• 182 Church Street East – sold in September 2011 for $7,350,000

2012 assessment $8,772,000 - GIM 7.04 – ASR 1.19

• 161 Church Street East – sold in January 2011 for $5,978,000

2012 assessment $6,109,000- GIM 8.42 – ASR 1.02

42The average ASR for the six properties analyzed is 1.11 which is an indication that the valuation methodology may be producing assessed values higher than current value. Section 44.(3)(b) does not require an assessment be increase above a properties current value to achieve equity.

CONCLUSION

43The Board finds that the current value of the property is $3,489,000 for the 2013 and 2014 taxation years. Therefore, the Board reduces the assessment from $3,950,000 to $3,489,000 for the 2013 and 2014 taxation years.

2015 DEEMED APPEAL

44An 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.

45Section 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.