Stephen Thirlwall and Nathalie Thirlwall v. Municipal Property Assessment Corporation, 2015 CanLII 22107

Assessment Review Board

Commission de révision de l’évaluation foncière

ISSUE DATE: April 20, 2015

FILE NO.: WR 124671

Assessed Person(s): Stephen Thirlwall and Nathalie Thirlwall

Appellant(s): Stephen Thirlwall and Nathalie Thirlwall

Respondent(s): Municipal Property Assessment Corporation (“MPAC”) Region 3

Respondent(s): City of Ottawa

Property Location(s): 725 Cooper Street

Municipality(ies): City of Ottawa

Roll Number(s): 0614-063-001-17700-0000

Appeal Number(s): 2994482, 3006395 and 3072804 (deemed 2014 and 2015)

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

Hearing Event No. 553272

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

ARB Case Name: WR 124671

Heard: March 13, 2014 in Ottawa, Ontario

APPEARANCES:

Parties

Counsel⁺/Representative

S.Thirlwall and N. Thirlwall

Self-represented

MPAC

C. White

City of Ottawa

No one appeared

DECISION OF THE BOARD DELIVERED BY TERRY DENISON

BACKGROUND

1Nathalie and Stephen Thirlwall (the “Appellants”) are the owners of 725 Cooper Street, Ottawa. The property is located on the north side of Cooper Street between Bronson Avenue and Percy Street in Ottawa’s Centretown neighborhood. It is a single-family detached home, built in 1957, in an neighborhood with a mix of housing types including singles doubles and multi-unit dwellings, most of which are older than the subject. Most of the surrounding buildings were constructed before the Second World War or earlier. The Appellants purchased the property in November of 2007 and paid $380,000 for it.

2For the taxation year 2013 (with a valuation day of January 1, 2012) MPAC assessed 725 Cooper Street with a current value of $558,000 and a classification of Residential (“RT”).

3The Appellants appealed the assessment on the basis that the assessed current value is too high.

ISSUES

4The issue of this appeal is whether or not $558,000 is the correct current value of the property for a January 1, 2012 valuation day, and if it is correct whether or not the assessment should be reduced to make it equitable with the assessments of similar properties in the vicinity.

DECISION

5The current value of the property as assessed at $558,000 is not correct. For the reasons set out below the assessment of the subject property is reduced to $505,000. The evidence does not support a need to further reduce the assessment to achieve equity with the assessment of similar properties in the vicinity.

Evidence of MPAC

6Chad White is a Property Valuation Analyst with MPAC. He presented MPAC’s evidence and submissions in this appeal.

7Mr. White filed a Property Profile of 725 Cooper Street as Exhibit 1. The Profile outlined details of the subject property. It describes the property as a single family detached building on a parcel of land that has a frontage of 33 feet (“ft.”), a depth of 104.41 ft., and an effective site area of 3,445.53 square feet (“sq. ft.”). The building was constructed in 1957 and was renovated in 1985. It is a two-storey structure with 862 sq. ft. on each level. There are three bedrooms and one bathroom. The basement has an area of 862 sq. ft. of which 312 are finished with a 7.5 ft. height.

8Mr. White prepared a Valuation Report for the subject property, which was filed as Exhibit 2. The report states that for the 2013 taxation year (with a valuation day of January 1, 2012) the current value of the property is $558,000. This conclusion was based on a direct sales comparison approach to value in which sales information from four properties was selected as comparables to the subject property. Appendix A: “Market Analysis” was attached to the Valuation Report and identifies the four comparable properties relied upon by MPAC were:

• Sale A 491 Cooper Street

• Sale B 679 Cooper Street

• Sale C 727 Cooper Street

• Sale D 314 Bay Street

9The four comparables are within a few blocks of the subject property. While there are some similarities, none of the comparables are identical to the subject property.

10Sale A, 491 Cooper Street has a slightly smaller lot than the subject, 3,259 sq. ft. versus 3,445.53 sq. ft. for the subject. It has a larger building area at 2,039 sq. ft. compared to the subject property’s 1,724 sq. ft. and is two-and-a-half storeys compared to the subject property’s two storeys. Although it was constructed earlier than the subject property, 1903 compared to 1957, it was renovated more recently in 2007, compared to a 1985 renovation of the subject property. It sold in October of 2012 for $620,000 and MPAC calculates the time adjusted sale price to be $637,000. MPAC states that Sale A is relatively comparable to the subject property.

11Sale B, 679 Cooper Street, has a smaller effective site area than the subject property. It is 2,716 sq. ft. compared to 3,445.53 sq. ft. for the subject property. Although constructed in 1880 it was renovated in 1990. It has a total building area of 1,415 sq. ft. in two storeys. This property sold for $555,000 in December of 2011 and MPAC calculates the time adjusted sale price to be $555,450. MPAC states that Sale B is relatively comparable to the subject property.

12Sale C, 727 Cooper Street, has the same lot area as the subject property. It was constructed in 1895 and renovated in 1999. It has two-and-a-quarter storeys and a total building area of 2,091 sq. ft. that is 367 sq. ft. larger than the subject property. It sold for $596,000 in January of 2010. MPAC calculates the time adjusted sale price to be $677,230 and states that the property is relatively comparable to the subject property.

13Sale D, 314 Bay Street, has a small lot. It has an effective site area of 1,865.16 compared to the subject property’s 3,445.53 sq. ft. It was originally constructed in 1892 and was renovated in 1990. It has a building area of 1,509 compared to the subject property’s 1,724 sq. ft. both have three bedrooms and two storeys. It sold for $430,000 in June of 2010 and MPAC calculates the time adjusted sale price to be $475,338.

14In order to complete an analysis of the four selected comparables MPAC looked at plotted median sales to assessment ratios by sales month. This data was used to determine the time adjustment factors for sales occurring before and after the valuation day. MPAC used 360 property sales to arrive at its time adjustment factors.

15MPAC also provided an Equity Analysis using 30 properties to illustrate that the Assessment to Sales Ratio (“ASR”) for the vicinity was 1.

16Mr. White concluded from his analysis that the value of the property was $579,000 and therefore an assessment of $558,000 was supportable, MPAC not having sought a higher assessment.

Evidence of the Appellants

17The Appellants filed Exhibit 3, a written summary of their evidence and submissions on this appeal. As well, Exhibit 4, which consisted of photographs of 727 Cooper Street adjacent to the subject property, 477 Lisgar Street, and 677 Cooper Street.

18The Appellants provide evidence about their property and neighborhood. They described their home as “fairly modest and on the exterior rather plain” as a “two-storey brick box”. They purchased the property in 2007 after its last renovation in 1985 and say that they have not undertaken any changes to it that would cause a large increase in its value.

19The Appellants criticized the statistical analysis they say MPAC followed to assess their property. In particular, they differ with MPAC’s hypothesis that their neighborhood is homogenous. They state that their property is being directly compared to a number of properties that are highly dissimilar and that more similar properties were not used for comparison.

20The Appellants expressed a concern that the assessment of their property has increased by approximately 40% above its previous assessment of $397,000.

21The Appellants view Western Centretown as a different market than Dalhousie.

Submissions of MPAC

22Mr. White submitted that the four comparables in this Valuation Report supported an assessment of $558,000.

Submissions of the Appellants

23The Appellants urged the Board to find that only one of MPAC’s comparables, Sale D, was comparable to the subject property, and that the Board should consider the sales of 677 Cooper Street and 477 Lisgar Street.

Relevant Legislation

24For the 2013 and 2014 taxation years, the Assessment Act ( “Act”) requires that the value at which land shall be assessed shall be based on its current value on the valuation day, which is January 1, 2012 for this appeal.

25Section 19.(1) of the Act states:

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

26Section 1 of the Act defines current value:

“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.

27Section 19.2(1) 3 of the Act defines valuation days:

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.

28The Act sets out the task that the Board has on an appeal, that is, to determine the current value and, if necessary make an adjustment to achieve equity:

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.

29The Act places the burden of proof of the current value on MPAC:

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.

30The Act requires the Board to make its decision based on the evidence and submissions made to it during a hearing:

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

Discussions and Analysis

31As in many assessment appeals the main task in this appeal is to find sales information from properties that are comparable to the subject property. To be helpful in determining the correct current value comparable properties must closely resemble the characteristics of the subject property. The characteristics to be compared include the age and physical features of the property, the neighborhood where it is located, the size of the lot, the age of the property, the built area, the number of rooms, and other features that make the property unique.

32Identical buildings located it different neighborhoods will not necessarily have the identical values, unless the neighborhoods are also identical. A three-bedroom house of 2,000 sq. ft. may have a different value than another three-bedroom house of 2,000 sq. ft. if they are not the same age or condition.

33MPAC uses a statistical methodology to conduct a mass appraisal of properties. While this is appropriate for the task the MPAC faces and generally produces reasonably accurate and fair assessments, it is not the same as an individual valuation of a property, which considers it specifically.

34In this appeal MPAC looked at the sales of four properties to support the assessment of the property. In the Valuation Report filed as Exhibit 2 MPAC calculated the sales price per square foot of the four properties to be $336.00 per sq. ft. Using that number applied to the area of the subject the Valuation Report concluded that the value was $579,000 ($336.00 x 1,724 sq. ft. = $579,000).

35One of the four properties had a significantly higher cost per sq. ft. compared to the other three. Sale B was $392.54 per sq. ft. while the other three were $312.57, $323.88 and $315.00. The average cost per sq. ft. without Sale B calculates to be $317.15. The fact that the per sq. ft. price of Sale B is quite higher than the other three suggests that there may be something different about the property or some aspects of its sale.

36If $317.15 was the average sale price per sq. ft. then the value of the subject property would calculate to be $546,756 ($317.15 x 1,724 sq. ft. = $546,756).

37Sales B had the highest sales cost per sq. ft. of the four comparables, but it also had the second smallest building area. This could indicate a higher level of finishes than the other properties and suggests that it may not be closely comparable to the subject property.

38Of the four comparables used by MPAC Sale D may most closely compare to the subject property, at least with respect to the building, yet it is only half the lot area at 1,742 sq. ft. compared to 3,445.53 for the subject property. The smaller lot size compared to the subject property could reasonably lead to a conclusion that its value would be lower than that of the subject, but other factors such as the level of finishes and amenities would also have to be considered.

39The Appellants looked at the sales information used by MPAC to arrive at Time Adjustment Factors. They identified properties from that information which they felt were comparable to their property. They provided a photograph of 477 Lisgar street, one of the properties among MPAC’s data. It sold in May of 2012 for $480,000 and had a 2012 assessment of $473,000. The Appellants argued that while this property was visually different than the subject property, it was very similar in its condition, makeup, and character and had two bathrooms compared to only one in the subject property. They also asked the Board to consider 677 Cooper Street, which sold for $457,000 in August of 2012. While limited evidence about these properties was given they do reasonably suggest a value for the subject property that is less than $558,000 as returned by MPAC when viewed with all of the evidence in this hearing.

40In examining the comparables put forward by MPAC, the Board does not find Sale A to be a close comparable to the subject property. It has a larger building area and an additional half storey. It was more recently renovated in 2007 compared to the 1985 renovation of the subject property.

41Nor does the Board find Sale B to be a close comparable to the subject property. It was originally constructed in 1880 and was renovated in 1990. The subject property was built in 1957 and renovated in 1985. Although Sale B has a smaller total building area than the subject property and the other three comparables MPAC calculated it’s per sq. ft. sales price to be significantly higher than them. This raises the question of why a purchaser would pay a higher price per sq. ft. for Sale B. The answer was not given in the evidence, but it is reasonable to assume that it has a higher level of finishes or some other attraction that may increase its value. In any event it is not the best comparable to the subject property.

42Sale C has a larger total building area than the subject and is two-and-a-quarter storeys. It is not a close comparable to determine the value of the subject property.

43Sale D is probably the closest comparable of those suggested by MPAC, although its smaller lot would likely result in it being valued less than the subject property. That is, the correct current value of the subject is higher than $475,338.

44The comparables suggested by the Appellants, 477 Lisgar Street and 667 Cooper Street sold for $480,000 and $457,000 in 2012. The detailed evidence about these properties was not adduced at the hearing, but from the photographs filed and the description given by the Appellants it would appear that these properties are relatively comparable to the subject property.

45Based on a consideration of all of the available evidence the Board concludes that the current value of the subject is lower than $558,000 and higher than $474,338, and probably closer to the lower value.

DECISION

46The Board finds, on the evidence produced at this hearing and the submissions of the parties, that the current value of the subject property is $505,000. The evidence does not support a further reduction to achieve equity with the assessment of similar properties in the vicinity.

2014 AND 2015 DEEMED APPEALS

47Appeals for the 2014 and 2015 taxation years are 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 2013 appeal before March 31, 2014. For that reason, this decision also applies to the 2014 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.

48Section 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.